(upbeat instrumental music) >> TheCUBE's live coverage is made possible by funding from Dell Technologies, creating technologies that drive human progress. (uplifting instrumental music) >> Hey everyone. Welcome to Barcelona, Spain. It's theCUBE Live at MWC '23. I'm Lisa Martin, Dave Vellante, our co-founder, our co-CEO of theCUBE, you know him, you love him. He's here as my co-host. Dave, we have a great couple of guests here to break down day one keynote. Lots of meat. I can't wait to be part of this conversation. Chris Lewis joins us, the founder and MD of Lewis Insight. And Sarbjeet Johal, one of you know him as well. He's a Cube contributor, cloud architect. Guys, welcome to the program. Thank you so much for joining Dave and me today. >> Lovely to be here. >> Thank you. >> Chris, I want to start with you. You have covered all aspects of global telecoms industries over 30 years working as an analyst. Talk about the evolution of the telecom industry that you've witnessed, and what were some of the things you heard in the keynote that excite you about the direction it's going? >> Well, as ever, MWC, there's no lack of glitz and glamour, but it's the underlying issues of the industry that are really at stake here. There's not a lot of new revenue coming into the telecom providers, but there's a lot of adjustment, readjustment of the underlying operational environment. And also, really importantly, what came out of the keynotes is the willingness and the necessity to really engage with the API community, with the developer community, people who traditionally, telecoms would never have even touched. So they're sorting out their own house, they're cleaning their own stables, getting the cost base down, but they're also now realizing they've got to engage with all the other parties. There's a lot of cloud providers here, there's a lot of other people from outside so they're realizing they cannot do it all themselves. It's quite a tough lesson for a very conservative, inward looking industry, right? So should we be spending all this money and all this glitz and glamour of MWC and all be here, or should would be out there really building for the future and making sure the services are right for yours and my needs in a business and personal lives? So a lot of new changes, a lot of realization of what's going on outside, but underlying it, we've just got to get this right this time. >> And it feels like that monetization is front and center. You mentioned developers, we've got to work with developers, but I'm hearing the latest keynote from the Ericsson CEOs, we're going to monetize through those APIs, we're going to charge the developers. I mean, first of all, Chris, am I getting that right? And Sarbjeet, as somebody who's close to the developer community, is that the right way to build bridges? But Chris, are we getting that right? >> Well, let's take the first steps first. So, Ericsson, of course, acquired Vonage, which is a massive API business so they want to make money. They expect to make money by bringing that into the mainstream telecom community. Now, whether it's the developers who pay for it, or let's face it, we are moving into a situation as the telco moves into a techco model where the techco means they're going to be selling bits of the technology to developer guys and to other application developers. So when he says he needs to charge other people for it, it's the way in which people reach in and will take going through those open APIs like the open gateway announced today, but also the way they'll reach in and take things like network slicing. So we're opening up the telecom community, the treasure chest, if you like, where developers' applications and other third parties can come in and take those chunks of technology and build them into their services. This is a complete change from the old telecom industry where everybody used to come and you say, "all right, this is my product, you've got to buy it and you're going to pay me a lot of money for it." So we are looking at a more flexible environment where the other parties can take those chunks. And we know we want collectivity built into our financial applications, into our government applications, everything, into the future of the metaverse, whatever it may be. But it requires that change in attitude of the telcos. And they do need more money 'cause they've said, the baseline of revenue is pretty static, there's not a lot of growth in there so they're looking for new revenues. It's in a B2B2X time model. And it's probably the middle man's going to pay for it rather than the customer. >> But the techco model, Sarbjeet, it looks like the telcos are getting their money on their way in. The techco company model's to get them on their way out like the app store. Go build something of value, build some kind of app or data product, and then when it takes off, we'll take a piece of the action. What are your thoughts from a developer perspective about how the telcos are approaching it? >> Yeah, I think before we came here, like I said, I did some tweets on this, that we talk about all kind of developers, like there's game developers and front end, back end, and they're all talking about like what they're building on top of cloud, but nowhere you will hear the term "telco developer," there's no API from telcos given to the developers to build IoT solutions on top of it because telco as an IoT, I think is a good sort of hand in hand there. And edge computing as well. The glimmer of hope, if you will, for telcos is the edge computing, I believe. And even in edge, I predicted, I said that many times that cloud players will dominate that market with the private 5G. You know that story, right? >> We're going to talk about that. (laughs) >> The key is this, that if you see in general where the population lives, in metros, right? That's where the world population is like flocking to and we have cloud providers covering the local zones with local like heavy duty presence from the big cloud providers and then these telcos are getting sidetracked by that. Even the V2X in cars moving the autonomous cars and all that, even in that space, telcos are getting sidetracked in many ways. What telcos have to do is to join the forces, build some standards, if not standards, some consortium sort of. They're trying to do that with the open gateway here, they have only eight APIs. And it's 2023, eight APIs is nothing, right? (laughs) So they should have started this 10 years back, I think. So, yeah, I think to entice the developers, developers need the employability, we need to train them, we need to show them some light that hey, you can build a lot on top of it. If you tell developers they can develop two things or five things, nobody will come. >> So, Chris, the cloud will dominate the edge. So A, do you buy it? B, the telcos obviously are acting like that might happen. >> Do you know I love people when they've got their heads in the clouds. (all laugh) And you're right in so many ways, but if you flip it around and think about how the customers think about this, business customers and consumers, they don't care about all this background shenanigans going on, do they? >> Lisa: No. >> So I think one of the problems we have is that this is a new territory and whether you call it the edge or whatever you call it, what we need there is we need connectivity, we need security, we need storage, we need compute, we need analytics, and we need applications. And are any of those more important than the others? It's the collective that actually drives the real value there. So we need all those things together. And of course, the people who represented at this show, whether it's the cloud guys, the telcos, the Nokia, the Ericssons of this world, they all own little bits of that. So that's why they're all talking partnerships because they need the combination, they cannot do it on their own. The cloud guys can't do it on their own. >> Well, the cloud guys own all of those things that you just talked about though. (all laugh) >> Well, they don't own the last bit of connectivity, do they? They don't own the access. >> Right, exactly. That's the one thing they don't own. So, okay, we're back to pipes, right? We're back to charging for connectivity- >> Pipes are very valuable things, right? >> Yeah, for sure. >> Never underestimate pipes. I don't know about where you live, plumbers make a lot of money where I live- >> I don't underestimate them but I'm saying can the telcos charge for more than that or are the cloud guys going to mop up the storage, the analytics, the compute, and the apps? >> They may mop it up, but I think what the telcos are doing and we've seen a lot of it here already, is they are working with all those major cloud guys already. So is it an unequal relationship? The cloud guys are global, massive global scale, the telcos are fundamentally national operators. >> Yep. >> Some have a little bit of regional, nobody has global scale. So who stitches it all together? >> Dave: Keep your friends close and your enemies closer. >> Absolutely. >> I know that saying never gets old. It's true. Well, Sarbjeet, one of the things that you tweeted about, I didn't get to see the keynote but I was looking at your tweets. 46% of telcos think they won't make it to the next decade. That's a big number. Did that surprise you? >> No, actually it didn't surprise me because the competition is like closing in on them and the telcos are competing with telcos as well and the telcos are competing with cloud providers on the other side, right? So the smaller ones are getting squeezed. It's the bigger players, they can hook up the newer platforms, I think they will survive. It's like that part is like any other industry, if you will. But the key is here, I think why the pain points were sort of described on the main stage is that they're crying out loud to tell the big tech cloud providers that "hey, you pay your fair share," like we talked, right? You are not paying, you're generating so much content which reverses our networks and you are not paying for it. So they are not able to recoup the cost of laying down their networks. By the way, one thing actually I want to mention is that they said the cloud needs earth. The cloud and earth, it's like there's no physical need to cloud, you know that, right? So like, I think it's the other way around. I think the earth needs the cloud because I'm a cloud guy. (Sarbjeet and Lisa laugh) >> I think you need each other, right? >> I think so too. >> They need each other. When they said cloud needs earth, right? I think they're still in denial that the cloud is a big force. They have to partner. When you can't compete with somebody, what do you do? Partner with them. >> Chris, this is your world. Are they in denial? >> No, I think they're waking up to the pragmatism of the situation. >> Yeah. >> They're building... As we said, most of the telcos, you find have relationships with the cloud guys, I think you're right about the industry. I mean, do you think what's happened since US was '96, the big telecom act when we started breaking up all the big telcos and we had lots of competition came in, we're seeing the signs that we might start to aggregate them back up together again. So it's been an interesting experiment for like 30 years, hasn't it too? >> It made the US less competitive, I would argue, but carry on. >> Yes, I think it's true. And Europe is maybe too competitive and therefore, it's not driven the investment needed. And by the way, it's not just mobile, it's fixed as well. You saw the Orange CEO was talking about the her investment and the massive fiber investments way ahead of many other countries, way ahead of the UK or Germany. We need that fiber in the ground to carry all your cloud traffic to do this. So there is a scale issue, there is a competition issue, but the telcos are very much aware of it. They need the cloud, by the way, to improve their operational environments as well, to change that whole old IT environment to deliver you and I better service. So no, it absolutely is changing. And they're getting scale, but they're fundamentally offering the basic product, you call it pipes, I'll just say they're offering broadband to you and I and the business community. But they're stepping on dangerous ground, I think, when saying they want to charge the over the top guys for all the traffic they use. Those over the top guys now build a lot of the global networks, the backbone submarine network. They're putting a lot of money into it, and by giving us endless data for our individual usage, that cat is out the bag, I think to a large extent. >> Yeah. And Orange CEO basically said that, that they're not paying their fair share. I'm for net neutrality but the governments are going to have to fund this unless you let us charge the OTT. >> Well, I mean, we could of course renationalize. Where would that take us? (Dave laughs) That would make MWC very interesting next year, wouldn't it? To renationalize it. So, no, I think you've got to be careful what we wish for here. Creating the absolute clear product that is required to underpin all of these activities, whether it's IoT or whether it's cloud delivery or whether it's just our own communication stuff, delivering that absolutely ubiquitously high quality for business and for consumer is what we have to do. And telcos have been too conservative in the past. >> I think they need to get together and create standards around... I think they have a big opportunity. We know that the clouds are being built in silos, right? So there's Azure stack, there's AWS and there's Google. And those are three main ones and a few others, right? So that we are fighting... On the cloud side, what we are fighting is the multicloud. How do we consume that multicloud without having standards? So if these people get together and create some standards around IoT and edge computing sort of area, people will flock to them to say, "we will use you guys, your API, we don't care behind the scenes if you use AWS or Google Cloud or Azure, we will come to you." So market, actually is looking for that solution. I think it's an opportunity for these guys, for telcos. But the problem with telcos is they're nationalized, as you said Chris versus the cloud guys are still kind of national in a way, but they're global corporations. And some of the telcos are global corporations as well, BT covers so many countries and TD covers so many... DT is in US as well, so they're all over the place. >> But you know what's interesting is that the TM forum, which is one of the industry associations, they've had an open digital architecture framework for quite some years now. Google had joined that some years ago, Azure in there, AWS just joined it a couple of weeks ago. So when people said this morning, why isn't AWS on the keynote? They don't like sharing the limelight, do they? But they're getting very much in bed with the telco. So I think you'll see the marriage. And in fact, there's a really interesting statement, if you look at the IoT you mentioned, Bosch and Nokia have been working together 'cause they said, the problem we've got, you've got a connectivity network on one hand, you've got the sensor network on the other hand, you're trying to merge them together, it's a nightmare. So we are finally seeing those sort of groups talking to each other. So I think the standards are coming, the cooperation is coming, partnerships are coming, but it means that the telco can't dominate the sector like it used to. It's got to play ball with everybody else. >> I think they have to work with the regulators as well to loosen the regulation. Or you said before we started this segment, you used Chris, the analogy of sports, right? In sports, when you're playing fiercely, you commit the fouls and then ask for ref to blow the whistle. You're now looking at the ref all the time. The telcos are looking at the ref all the time. >> Dave: Yeah, can I do this? Can I do that? Is this a fair move? >> They should be looking for the space in front of the opposition. >> Yeah, they should be just on attack mode and commit these fouls, if you will, and then ask for forgiveness then- >> What do you make of that AWS not you there- >> Well, Chris just made a great point that they don't like to share the limelight 'cause I thought it was very obvious that we had Google Cloud, we had Microsoft there on day one of this 80,000 person event. A lot of people back from COVID and they weren't there. But Chris, you brought up a great point that kind of made me think, maybe you're right. Maybe they're in the afternoon keynote, they want their own time- >> You think GSMA invited them? >> I imagine so. You'd have to ask GSMA. >> I would think so. >> Get Max on here and ask that. >> I'm going to ask them, I will. >> But no, and they don't like it because I think the misconception, by the way, is that everyone says, "oh, it's AWS, it's Google Cloud and it's Azure." They're not all the same business by any stretch of the imagination. AWS has been doing loads of great work, they've been launching private network stuff over the last couple of weeks. Really interesting. Google's been playing catch up. We know that they came in readily late to the market. And Azure, they've all got slightly different angles on it. So perhaps it just wasn't right for AWS and the way they wanted to pitch things so they don't have to be there, do they? >> That's a good point. >> But the industry needs them there, that's the number one cloud. >> Dave, they're there working with the industry. >> Yeah, of course. >> They don't have to be on the keynote stage. And in fact, you think about this show and you mentioned the 80,000 people, the activity going on around in all these massive areas they're in, it's fantastic. That's where the business is done. The business isn't done up on the keynote stage. >> That's why there's the glitz and the glamour, Chris. (all laugh) >> Yeah. It's not glitz, it's espresso. It's not glamour anymore, it's just espresso. >> We need the espresso. >> Yeah. >> I think another thing is that it's interesting how an average European sees the tech market and an average North American, especially you from US, you have to see the market. Here, people are more like process oriented and they want the rules of the road already established before they can take a step- >> Chris: That's because it's your pension in the North American- >> Exactly. So unions are there and the more employee rights and everything, you can't fire people easily here or in Germany or most of the Europe is like that with the exception of UK. >> Well, but it's like I said, that Silicone Valley gets their money on the way out, you know? And that's how they do it, that's how they think it. And they don't... They ask for forgiveness. I think the east coast is more close to Europe, but in the EU, highly regulated, really focused on lifetime employment, things like that. >> But Dave, the issue is the telecom industry is brilliant, right? We keep paying every month whatever we do with it. >> It's a great business, to your point- >> It's a brilliant business model. >> Dave: It's fantastic. >> So it's about then getting the structure right behind it. And you know, we've seen a lot of stratification where people are selling off towers, Orange haven't sold their towers off, they made a big point about that. Others are selling their towers off. Some people are selling off their underlying network, Telecom Italia talking about KKR buying the whole underlying network. It's like what do you want to be in control of? It's a great business. >> But that's why they complain so much is that they're having to sell their assets because of the onerous CapEx requirements, right? >> Yeah, they've had it good, right? And dare I say, perhaps they've not planned well enough for the future. >> They're trying to protect their past from the future. I mean, that's... >> Actually, look at the... Every "n" number of years, there's a new faster network. They have to dig the ground, they have to put the fiber, they have to put this. Now, there are so many booths showing 6G now, we are not even done with 5G yet, now the next 6G you know, like then- >> 10G's coming- >> 10G, that's a different market. (Dave laughs) >> Actually, they're bogged down by the innovation, I think. >> And the generational thing is really important because we're planning for 6G in all sorts of good ways but actually what we use in our daily lives, we've gone through the barrier, we've got enough to do that. So 4G gives us enough, the fiber in the ground or even old copper gives us enough. So the question is, what are we willing to pay for more than that basic connectivity? And the answer to your point, Dave, is not a lot, right? So therefore, that's why the emphasis is on the business market on that B2B and B2B2X. >> But we'll pay for Netflix all day long. >> All day long. (all laugh) >> The one thing Chris, I don't know, I want to know your viewpoints and we have talked in the past as well, there's absence of think tanks in tech, right? So we have think tanks on the foreign policy and economic policy in every country, and we have global think tanks, but tech is becoming a huge part of the economy, global economy as well as national economies, right? But we don't have think tanks on like policy around tech. For example, this 4G is good for a lot of use cases. Then 5G is good for smaller number of use cases. And then 6G will be like, fewer people need 6G for example. Why can't we have sort of those kind of entities dictating those kind of like, okay, is this a wiser way to go about it? >> Lina Khan wants to. She wants to break up big tech- >> You're too young to remember but the IT used to have a show every four years in Geneva, there were standards around there. So I think there are bodies. I think the balance of power obviously has gone from the telecom to the west coast to the IT markets. And it's changing the balance about, it moves more quickly, right? Telecoms has never moved quickly enough. I think there is hope by the way, that telecoms now that we are moving to more softwarized environment, and God forbid, we're moving into CICD in the telecom world, right? Which is a massive change, but I think there's hopes for it to change. The mentality is changing, the culture is changing, but to change those old structured organizations from the British telecom or the France telecom into the modern world, it's a hell of a long journey. It's not an overnight journey at all. >> Well, of course the theme of the event is velocity. >> Yeah, I know that. >> And it's been interesting sitting here with the three of you talking about from a historic perspective, how slow and molasseslike telecom has been. They don't have a choice anymore. As consumers, we have this expectation we're going to get anything we want on our mobile device, 24 by seven. We don't care about how the sausage is made, we just want the end result. So do you really think, and we're only on day one guys... And Chris we'll start with you. Is the theme really velocity? Is it disruption? Are they able to move faster? >> Actually, I think invisibility is the real answer. (Lisa laughs) We want communication to be invisible, right? >> Absolutely. >> We want it to work. When we switch our phones on, we want it to work and we want to... Well, they're not even phones anymore, are they really? I mean that's the... So no, velocity, we've got... There is momentum in the industry, there's no doubt about that. The cloud guys coming in, making telecoms think about the way they run their own business, where they meet, that collision point on the edges you talked about Sarbjeet. We do have velocity, we've got momentum. There's so many interested parties. The way I think of this is that the telecom industry used to be inward looking, just design its own technology and then expect everyone else to dance to our tune. We're now flipping that 180 degrees and we are now having to work with all the different outside forces shaping us. Whether it's devices, whether it's smart cities, governments, the hosting guys, the Equinoxis, all these things. So everyone wants a piece of this telecom world so we've got to make ourselves more open. That's why you get in a more open environment. >> But you did... I just want to bring back a point you made during COVID, which was when everybody switched to work from home, started using their landlines again, telcos had to respond and nothing broke. I mean, it was pretty amazing. >> Chris: It did a good job. >> It was kind of invisible. So, props to the telcos for making that happen. >> They did a great job. >> So it really did. Now, okay, what have you done for me lately? So now they've got to deal with the future and they're talking monetization. But to me, monetization is all about data and not necessarily just the network data. Yeah, they can sell that 'cause they own that but what kind of incremental value are they going to create for the consumers that... >> Yeah, actually that's a problem. I think the problem is that they have been strangled by the regulation for a long time and they cannot look at their data. It's a lot more similar to the FinTech world, right? I used to work at Visa. And then Visa, we did trillion dollars in transactions in '96. Like we moved so much money around, but we couldn't look at these things, right? So yeah, I think regulation is a problem that holds you back, it's the antithesis of velocity, it slows you down. >> But data means everything, doesn't it? I mean, it means everything and nothing. So I think the challenge here is what data do the telcos have that is useful, valuable to me, right? So in the home environment, the fact that my broadband provider says, oh, by the way, you've got 20 gadgets on that network and 20 on that one... That's great, tell me what's on there. I probably don't know what's taking all my valuable bandwidth up. So I think there's security wrapped around that, telling me the way I'm using it if I'm getting the best out of my service. >> You pay for that? >> No, I'm saying they don't do it yet. I think- >> But would you pay for that? >> I think I would, yeah. >> Would you pay a lot for that? I would expect it to be there as part of my dashboard for my monthly fee. They're already charging me enough. >> Well, that's fine, but you pay a lot more in North America than I do in Europe, right? >> Yeah, no, that's true. >> You're really overpaying over there, right? >> Way overpaying. >> So, actually everybody's looking at these devices, right? So this is a radio operated device basically, right? And then why couldn't they benefit from this? This is like we need to like double click on this like 10 times to find out why telcos failed to leverage this device, right? But I think the problem is their reliance on regulations and their being close to the national sort of governments and local bodies and authorities, right? And in some countries, these telcos are totally controlled in very authoritarian ways, right? It's not like open, like in the west, most of the west. Like the world is bigger than five, six countries and we know that, right? But we end up talking about the major economies most of the time. >> Dave: Always. >> Chris: We have a topic we want to hit on. >> We do have a topic. Our last topic, Chris, it's for you. You guys have done an amazing job for the last 25 minutes talking about the industry, where it's going, the evolution. But Chris, you're registered blind throughout your career. You're a leading user of assertive technologies. Talk about diversity, equity, inclusion, accessibility, some of the things you're doing there. >> Well, we should have had 25 minutes on that and five minutes on- (all laugh) >> Lisa: You'll have to come back. >> Really interesting. So I've been looking at it. You're quite right, I've been using accessible technology on my iPhone and on my laptop for 10, 20 years now. It's amazing. And what I'm trying to get across to the industry is to think about inclusive design from day one. When you're designing an app or you're designing a service, make sure you... And telecom's a great example. In fact, there's quite a lot of sign language around here this week. If you look at all the events written, good to see that coming in. Obviously, no use to me whatsoever, but good for the hearing impaired, which by the way is the biggest category of disability in the world. Biggest chunk is hearing impaired, then vision impaired, and then cognitive and then physical. And therefore, whenever you're designing any service, my call to arms to people is think about how that's going to be used and how a blind person might use it or how a deaf person or someone with physical issues or any cognitive issues might use it. And a great example, the GSMA and I have been talking about the app they use for getting into the venue here. I downloaded it. I got the app downloaded and I'm calling my guys going, where's my badge? And he said, "it's top left." And because I work with a screen reader, they hadn't tagged it properly so I couldn't actually open my badge on my own. Now, they changed it overnight so it worked this morning, which is fantastic work by Trevor and the team. But it's those things that if you don't build it in from scratch, you really frustrate a whole group of users. And if you think about it, people with disabilities are excluded from so many services if they can't see the screen or they can't hear it. But it's also the elderly community who don't find it easy to get access to things. Smart speakers have been a real blessing in that respect 'cause you can now talk to that thing and it starts talking back to you. And then there's the people who can't afford it so we need to come down market. This event is about launching these thousand dollars plus devices. Come on, we need below a hundred dollars devices to get to the real mass market and get the next billion people in and then to educate people how to use it. And I think to go back to your previous point, I think governments are starting to realize how important this is about building the community within the countries. You've got some massive projects like NEOM in Saudi Arabia. If you have a look at that, if you get a chance, a fantastic development in the desert where they're building a new city from scratch and they're building it so anyone and everyone can get access to it. So in the past, it was all done very much by individual disability. So I used to use some very expensive, clunky blind tech stuff. I'm now using mostly mainstream. But my call to answer to say is, make sure when you develop an app, it's accessible, anyone can use it, you can talk to it, you can get whatever access you need and it will make all of our lives better. So as we age and hearing starts to go and sight starts to go and dexterity starts to go, then those things become very useful for everybody. >> That's a great point and what a great champion they have in you. Chris, Sarbjeet, Dave, thank you so much for kicking things off, analyzing day one keynote, the ecosystem day, talking about what velocity actually means, where we really are. We're going to have to have you guys back 'cause as you know, we can keep going, but we are out of time. But thank you. >> Pleasure. >> We had a very spirited, lively conversation. >> Thanks, Dave. >> Thank you very much. >> For our guests and for Dave Vellante, I'm Lisa Martin, you're watching theCUBE live in Barcelona, Spain at MWC '23. We'll be back after a short break. See you soon. (uplifting instrumental music)

>>Welcome back everyone to Cube's live coverage, VMware Explorer, 2022 formerly world. I've been saying now I gotta get that out. Dave, I've been sayingm world. It just kind of comes off the tongue when I'm tired, but you know, wall to wall coverage, again, back to back interviews all day two sets. This is a wrap up here with the analyst discussion. Got one more interview after this really getting the analyst's perspective around what we've been hearing and seeing, observing, and reporting on the cube. Again, two sets blue and green. We call them here on the show floor on Moscone west with the sessions upstairs, two floors of, of amazing content sessions, keynote across ed Moscone, north and south SBI here, cloud strategists with the cube. And of course, what event wouldn't be complete without SBE weighing in on the analysis. And, and, and I'm, you know, all kidding aside. I mean that because we've had great interactions around, you know, digging in you, you're like a roving analyst out there. And what's great about what you do is you're social. You're communicating, you're touching everybody out there, but you're also picking up the puzzle pieces. And we, you know, of course we recognize that cuz that's what we do, but you're out, we're on the set you're out on the floor and you know your stuff and, and you know, clouds. So how you, this is your wheelhouse. Great to see you. Good to >>See you. I'm good guys. Thank you. Thank you for having >>Me. So I mean, Dave and I were riffing going back earlier in this event and even before, during our super cloud event, we're reminded of the old OpenStack days. If you remember, Dave OpenStack was supposed to be the open source version of cloud. And that was a great ambition. And the cloud AATI at that time was very into it because it made a lot of sense. And the vision, all the infrastructure was code. Everything was lined up. Everything was religiously was on the table. Beautiful cloud future. Okay. 20 2009, 2010, where was Amazon? Then they just went off like a rocket ship. So cloud ended up becoming AWS in my opinion. Yeah. OpenStax then settled in, did some great things, but also spawns Kubernetes. Okay. So, you know, we've lived through thiss we've seen this movie. We were actually in the trenches on the front lines present at creation for cloud computing. >>Yeah. I was at Rackspace when the open stack was open sourced. I was there in, in the rooms and discussions and all that. I think OpenStack was given to the open source like prematurely. I usually like we left a toddler on the freeway. No, the toddler >>Got behind the wheel. Can't see over the dashboard. >>So we have learned over the years in last two decades, like we have seen the open source rise of open source and we have learned quite a few lessons. And one lesson we learned from there was like, don't let a project go out in the open, tell it mature enough with one vendor. So we did that prematurely with NASA, NASA and Rackspace gave the, the code from two companies to the open source community and then likes of IBM and HPE. No. Now HPE, they kind of hijacked the whole thing and then put a lot of developers on that. And then lot of us sort of second tier startup. >>But, but, but I remember not to interject, but at that time there wasn't a lot of pushback for letting them it wasn't like they infiltrated like a, the vendors always tried to worry about vendors coming in open source, but at that time was pretty people accepted them. And then it got off the rails. Then you remember the great API debate. You >>Called it a hail Mary to against AWS, which is, is what it was, what it was. >>It's true. Yeah. Ended up being right. But the, the battle started happening when you started seeing the network perimeters being discussed, you starting to see some of the, in the trenches really important conversations around how to make essentially cross cloud or super cloud work. And, and again, totally premature it continue. And, and what does that mean today? So, okay. Is VMware too early on their cross cloud? Are they, is multi-cloud ready? >>No >>For, and is it just vaporware? >>No, they're not too early, actually on, on, on, on that side they were premature to put that out there, but this is like very mature company, like in the ops area, you know, we have been using, we VMware stuff since 2000 early 2000. I, I was at commerce one when we started using it and yeah, it was for lab manager, you know, like, you know, put the labs >>Out desktop competition. >>Yeah, yeah. Kind of thing. So it, it matured pretty fast, but now it it's like for all these years they focused on the op site more. Right. And then the challenge now in the DevOps sort of driven culture, which is very hyped, to be honest with you, they have try and find a place for developers to plug in on the left side of the sort of whole systems, life cycle management sort of line, if you will. So I think that's a, that's a struggle for, for VMware. They have to figure that out. And they are like a tap Tansu application platform services. They, they have released a new version of that now. So they're trying to do that, but still they are from the sort of get ups to the, to the right, from that point to the right on the left side. They're lot more tooling to helpers use as we know, but they are very scattered kind of spend and scattered technology on the left side. VMware doesn't know how to tackle that. But I think, I think VMware should focus on the right side from the get ups to the right and then focus there. And then how in the multi-cloud cross cloud. >>Cause my sense is, they're saying, Hey, look, we're not gonna own the developers. I think they know that. And they think they're saying do develop in whatever world you want to develop in will embrace it. And then the ops guys, we, we got you covered, we got the standards, we have the consistency and you're our peeps. You tend then take it, you know, to, to the market. Is that not? I mean, it seems like a viable strategy. I >>Mean, look at if you're VMware Dave and start, you know, this where they are right now, the way they missed the cloud. And they had to reboot that with jazzy and, and, and Raghu to do the databases deal. It's essentially VMware hosted on AWS and clients love it cuz it's clarity. Okay. It's not vCloud air. So, so if you're them right now, you seeing yourself, wow. We could be the connective tissue between all clouds. We said this from day one, when Kubernetes was hitting in the scene, whoever can make this, the interoperability concept of inter clouding and connect clouds so that there could be spanning of applications and data. We didn't say data, but we said, you know, creating that nice environment of multiple clouds. Okay. And again, in concept, that sounds simple, but if you're VMware, you could own that abstraction layer. So do you own it or do you seed the base and let it become a defacto organization? Like a super layer, super pass layer and then participate in it? Or are you the middleware yourself? We heard AJ Patel say that. So, so they could be the middleware for at all. >>Aren't they? The infrastructure super cloud. I mean, that's what they're trying to be. >>Yeah. I think they're trying, trying to do that. It's it's I, I, I have said that many times VMware is bridged to the cloud, right? >>The sorry. Say bridge to >>The cloud. Yeah. Right. For, for enterprises, they have virtualized environments, mostly on VMware stacks. And another thing is I wanna mention touch on that is the number of certified professionals on VMware stack. There it's a huge number it's in tens of thousands. Right? So people who have got these certifications, they want to continue that sort of journey. They wanna leverage that. It's like, it's a Sunco if they don't use that going forward. And that was my question to, to during the press release yesterday, like are there new certifications coming into the, into the limelight? I, I think the VMware, if they're listening to me here somewhere, they will listen. I guess they should introduce a, a cross cloud certification for their stack because they want to be cross cloud or multi-cloud sort of vendor with one sort of single pane. So does actually Cisco and so do many others. But I think VMware is in a good spot. It's their market to lose. I, I, I call it when it comes to the multi-cloud for enterprise, especially for the legacy applications. >>Well, they're not, they have the enterprise they're super cloud enabler, Dave for the, for the enterprise, cuz they're not hyperscaler. Okay. They have all the enterprise customers who come here, we see them, we speak to them. We know them will mingle, but >>They have really good relationships with all the >>Hyperscale. And so those, those guys need a way to the cloud in a way that's cloud operation though. So, so if you say enterprises need their own super cloud, I would say VMware might wanna raise their hands saying we're the vendor to provide that. Yes, totally. And then that's the middleware role. So middleware isn't your classic stack middleware it's middle tissue. So you got, it's not a stack model anymore. It's completely different. >>Maybe, maybe my, my it's >>Not a stack >>Industry. Maybe my industry super cloud is too aspirational, but so let's assume for a second. You're not gonna have everybody doing their own clouds, like Goldman Sachs and, and capital one, even though we're seeing some evidence of that, even in that case, connecting my on-prem to the cloud and modernizing my application stack and, and having some kind of consistency between your on-prem and it's just call it hybrid, like real hybrid, true hybrid. They should dominate that. I mean, who is who, if it's not it's VMware and it's what red hat who else? >>I think red hat wants it too. >>Yeah. Well, red hat and red, hat's doing it with IBM consulting and they gotta be, they have great advantage there for all the banks. Awesome. But what, what about the other 500,000 customers that are >>Out there? If VMware could do what they did with the hypervisor, with virtualization and create the new thing for super cloud, AKA connecting clouds together. That's a, that's a holy grail move right >>There. But what about this PA layer? This Tansu and area which somebody on Twitter, there was a little SNAR come that's V realized just renamed, which is not. I mean, it's, it's from talking to Raghu unless he's just totally BSing us, which I don't think he is. That's not who he is. It's this new federated architecture and it's this, their super PAs layer and, and, and it's purpose built for what they're trying to do across clouds. This is your wheelhouse. What, what do you make of that? >>I think Tansu is a great effort. They have put in lot of other older products under that one umbrella Tansu is not a product actually confuses the heck out of the market. That it's not a product. It's a set of other products put under one umbrella. Now they have created another umbrella term with the newer sort of, >>So really is some yeah. >>Two >>Umbrella on there. So it's what it's pivotal. It's vRealize it's >>Yeah. We realize pivotal and, and, and older stack, actually they have some open source components in there. So, >>So they claim that this ragus claim, it's this new architecture, this new federated architecture graph database, low latency, real time ingestion. Well, >>AJ, AJ that's AJ's department, >>It sounded good. I mean, this is that >>Actually I think the newer, newer stuff, what they announced, that's very promising because it seems like they're building something from scratch. So, >>And it won't be, it won't be hardened for, but, but >>It won't be hardened for, but, >>But those, but they have a track record delivering. I mean, they gotta say that about yeah. >>They're engineering focus company. They have engineering culture. They're their software engineers are top. Not top not, >>Yes. >>What? >>Yeah. It's all relatives. If they, if the VMware stays the way they are. Well, >>Yeah, >>We'll get to that a second. What >>Do you mean? What are you talking >>About? They don't get gutted >>The elephant in the room if they don't get gutted and then, then we'll see it happens there. But right now I love, we love VMware. We've been covering them for 12 years and we've seen the trials, not without their own issues to work on. I mean, everyone needs to work on stuff, but you know, world class, they're very proud of their innovation, but I wanna ask you, what was your observations walking around the floor, talking to people? What was the sense of the messaging? Is it real in their minds? Are they leaning in, are they like enthused? Are they nervous, apprehensive? How would you categorize the attitude of the folks here that you've talked to or observed? >>Yeah. It at the individual product level, like the people are very confident what they're building, what they're delivering, but when it comes to the telling a cohesive story, if you go to all the VMware booth there, like it's hard to find anybody who can tell what, what are all the services under tens and how they are interconnected and what facilities they provide or they can't. They, I mean, most of the people who are there, they can are walking through the economic side of things, like how it will help you save money or, or how the TCR ROI will improve. They are very focused on because of the nature of the company, right. They're very focused on the technology only. So I think that that's the, that's what I learned. And another sort of gripe or negative I have about VMware is that they have their product portfolio is so vast and they are even spreading more thinly. And they're forced to go to the left towards developers because of the sheer force of hyperscalers. On one side on the, on the right side, they are forced to work with hyperscalers to do more like ops related improvements. They didn't mention AI or, or data. >>Yeah. Data storage management. >>That that was weak. That's true. During the, the keynote as well. >>And they didn't mention security and their security story, strong >>Security. I think they mentioned it briefly very briefly, very briefly. But I think their SCO story is good actually, but no is they didn't mention it properly, I guess. >>Yeah. There wasn't prominent in the keynote. It was, you know, and again, I understand why data wasn't P I, they wanted to say about data, >>Didn't make room for the developer story. I think this was very much a theatrical maneuver for Hawk and the employee morale and the ecosystem morale, Dave, then it had to do with the nuts bolt of security. They can come back to get that security. In my opinion, you know, I, I don't think that was as bad of a call as bearing the vSphere, giving more demos, which they did do later. But the keynote I thought was, was well done as targeted for all the negative sentiment around Broadcom and Broadcom had this, the acquisition agreement that they're, they are doing, they agree >>Was well done. I mean, >>You know, if I VMware, I would've done the same thing, look at this is a bright future. We're given that we're look at what we got. If you got this, it's on you. >>And I agree with you, but the, the, again, I don't, I don't see how you can't make security front and center. When it is the number one issue for CIOs, CSOs, CSOs boards or directors, they just, it was a miss. They missed it. Yeah. Okay. And they said, oh, well, there's only so much time, but, and they had to put the application development focus on there. I get that. But >>Another thing is, I think just keynote is just one sort of thing. One moment in this whole sort of continuous period, right. They, I think they need to have that narrative, like messaging done periodically, just like Amazon does, you know, like frequent events tapping into the practitioners on regional basis. They have to do that. Maybe it's a funding issue. Maybe it is some weakness on the, no, >>I think they planning, I talked to, we talked to the CMO and she said, Explorer is gonna be a road show. They're gonna go international with, it's gonna take a global, they're gonna have a lot of wood behind the arrow. They're gonna spend a lot of money on Explorer is what, they're, what we're seeing. And that's a good thing. You got a new brand, you gotta build it. >>You know, I would've done, I would've had, I would've had a shorter keynote on day one and doing, and then I would've done like a security day, day two. I would've dedicated the whole morning, day two keynote to security cuz their stories I think is that strong? >>Yeah. >>Yeah. And I don't know the developers side of things. I think it's hard for VMware to go too much to the left. The spend on the left is very scattered. You know, if you notice the tools, developers change their tools on freaking monthly basis, right? Yeah. Yeah. So it's hard to sustain that they on the very left side and the, the, the >>It's hard for companies like VMware to your point. And then this came up in super cloud and ins Rayme mentioned that developers drive everything, the patterns, what they like and you know, the old cliche meet them where they are. You know, honestly, this is kind of what AJ says is the right they're doing. And it's the right strategy meeting that develops where they are means give them something that they like. They like self-service they like to try stuff. They like to, they don't like it. They'll throw it away. Look at the success that comes like data, dog companies like that have that kind of offering with freemium and self-service to, to continue the wins versus jamming the tooling down their throat and selling >>Totally self-serve infrastructure for the, in a way, you know, you said they missed cloud, which they did V cloud air. And then they thought of got it. Right. It kind of did the same thing with pivotal. Right. It was almost like they forced to take pivotal, you know, by pivotal, right. For 2 billion or whatever it was. All right. Do something with it. Okay. We're gonna try to do something with it and they try to go out and compete. And now they're saying, Hey, let's just open it up. Whatever they want to use, let 'em use it. So unlike and I said this yesterday, unlike snowflake has to attract developers to build on their unique platform. Okay. I think VMware's taken a different approach saying use whatever you want to use. We're gonna help the ops guys. And that, to me, a new op >>Very sensitive, >>The new ops, the new ops guys. Yes. Yes. >>I think another challenge on the right right. Is on, on the op site is like, if, if you are cloud native, you are a new company. You just, when you're a startup, you are cloud native, right. Then it's hard for VMware to convince them to, Hey, you know, come to us and use this. Right. It's very hard. It is. They're a good play for a while. At least they, they can prolong their life by innovating along the way because of the, the skills gravity, I call it of the developers and operators actually that's their, they, they have a loyal community they have and all that stuff. And by the way, the name change for the show. I think they're trying to get out of that sort of culty kind of nature of the, their communities that they force. The communities actually can force the companies, not to do certain things certain way. And I've seen that happening. And >>Well, I think, I think they're gonna learn and they already walked back their messaging. Not that they said anything overtly, but you know, the Lori, the CMO clarified this significantly, which was, they never said that they wanted to replace VM world. Although the name change implies that. And what they re amplified after the fact is that this is gonna be a continuation of the community. And so, you know, it's nuanced, they're splitting hairs, but that's, to me walking back the, you know, the, the loyalty and, and look at let's face it. Anytime you have a loyal community, you do anything of change. People are gonna be bitching and moaning. Yeah. >>But I mean, knew, worked, explore, >>Work. It wasn't bad at all. It was not a bad look. It wasn't disastrous call. Okay. Not at all. I'm critical of the name change at first, but the graphics are amazing. They did an exceptional job on the branding. They did, did an exceptional job on how they handled the new logo, the new name, the position they, and a lot of people >>Showed >>Up. Yeah. It worked >>A busy busier than all time >>It worked. And I think they, they threaded the needle, given everything they had going on. I thought the event team did an exceptional job here. I mean, just really impressive. So hats up to the event team at, at VMware pulling off now, did they make profit? I don't know. It doesn't matter, you know, again, so much going on with Broadcom, but here being in Moscone west, we see people coming down the stairs here, Dave's sessions, you know, lot of people, a lot of buzz on the content sold out sessions. So again, that's the ecosystem. The people giving the talks, you know, the people in the V brown bag, you know, got the, the V tug. They had their meeting, you know, this week here, >>Actually the, the, the red hat, the, the integration with the red hat is another highlight of, of, they announced that, that you can run that style >>OpenShift >>And red hats, not here, >>Red hat now here, but yeah, but, but, but >>It was more developers, more, you know, >>About time. I would say, why, why did it take so long? That should >>Have happened. All right. Final question. So what's the bottom line. Give us the summary. What's your take, what's your analysis of VMware explore the event, what they did, what it means, what it's gonna mean when the event's over, what's gonna happen. >>I think VMware with the VMware Explorer have bought the time with the messaging. You know, they have promised certain things with newer announcements and now it, it, it is up to them to deliver that in a very sort of fast manner and build more hooks into other sort of platforms. Right? So that is very important. You cannot just be closed system people. Don't like those systems. You have to be part of the ecosystem. And especially when you are sitting on top of the actually four or four or more public clouds, Alibaba cloud was, they were saying that they're the only VMware is only VMware based offering in mainland China on top of the Alibaba. And they, they can go to other ones as well. So I think, especially when they're sitting on top of other cloud providers, they have to build hooks into other platforms. And if they can build a marketplace of their own, that'll be even better. I think they, >>And they've got the ecosystem for it. I mean, you saw it last night. I mean, all the, all the parties were hopping. I mean, there was, there's >>A lot of buzz. I mean, I pressed, I pressed them Dave hard. I had my little, my zingers. I wanted to push the buttons on one question that was targeted towards the answer of, are they gonna try to do much more highly competitive maneuvering, you know, get that position in the middleware. Are they gonna be more aggressive with frontal competitiveness or are they gonna take the, the strategy of open collaborative and every single data point points to collaborative totally hit Culbert. I wanna do out in the open. We're not just not, we're not one company. So I think that's the right play. If they came out and said, we're gonna be this, you know? >>Yeah. The one, the last thing, actually, the, the one last little idea I'm putting out out there since I went to the Dell world, was that there's a economics of creation of software. There's economics of operations of software. And they are very good on the operation economics of operations side of things that when I say economics, it doesn't mean money only. It also means a productivity practitioner, growth. Everything is in there. So I think these vendors who are not hyperscalers, they have to distinguish these two things and realize that they're very good on the right side economics of operations. And, and that will go a long way. Actually. I think they muddy the waters by when DevOps, DevOps, and then it's >>Just, well, I think Dave, we always we've had moments in time over the past 12 years covering VMware's annual conference, formally world now floor, where there were moments of that's pat Gelsinger, spinal speech. Yeah. And I remember he was under a siege of being fired. Yeah. There was a point in time where it was touch and go, and then everything kind of came together. That was a moment. I think we're at a moment in time here with VMware Dave, where we're gonna see what Broadcom does, because I think what hop 10 and Broadcom saw this week was an EBI, a number on the table that they know they can probably get or squeeze. And then they saw a future value and net present value of future state that you could, you gotta roll back and do the analysis saying, okay, how much is it worth all this new stuff worth? Is that gonna contribute to the EBITDA number that they want on the number? So this is gonna be a very interesting test because VMware did it, an exceptional job of laying out that they got some jewels in the oven. You >>Think about how resilient this company has been. I mean, em, you know, EMC picked them up for a song. It was 640 million or whatever it was, you know, about the public. And then you, another epic moment you'll recall. This was when Joe Tuchi was like the mafia Don up on stage. And Michael Dell was there, John Chambers with all the ecosystem CEOs and there was Tucci. And then of course, Michael Dell ends up owning this whole thing, right? I mean, when John Chambers should have owned the whole thing, I mean, it's just, it's been incredible. And then Dell uses VMware as a piggy bank to restructure its balance sheet, to pay off the EMC debt and then sells the thing for $60 billion. And now it's like, okay, we're finally free of all this stuff. Okay. Now Broadcom's gonna buy you. And, >>And if Michael Dell keeps all in stock, he'll be the largest shareholder of Broadcom and own it off. >>Well, and that's probably, you know, that's a good question is, is it's gonna, it probably a very tax efficient transaction. If he takes all stock and then he can, you know, own against it. I mean, that's, that's, >>That's what a history we're gonna leave it there. Start be great to have you Dave great analysis. Okay. We'll be back with more coverage here. Day two, winding down after the short break.

(upbeat music) >> Welcome back, everyone to CUBE Supercloud 22. I'm John Furrier, your host. Got a great influencer, Cloud Cloud RRT segment with Sarbjeet Johal, Cloud influencer, Cloud economist, Cloud consultant, Cloud advisor. Sarbjeet, welcome back, CUBE alumni. Good to see you. >> Thanks John and nice to be here. >> Now, what's your title? Cloud consultant? Analyst? >> Consultant, actually. Yeah, I'm launching my own business right now formally, soon. It's in stealth mode right now, we'll be (inaudible) >> Well, I'll just call you a Cloud guru, Cloud influencer. You've been great, friend of theCUBE. Really powerful on social. You share a lot of content. You're digging into all the trends. Supercloud is a thing, it's getting a lot of traction. We introduced that concept last reinvent. We were riffing before that. As we kind of were seeing the structural change that is now Supercloud, it really is kind of the destination or outcome of what we're seeing with hybrid cloud as a steady state into the what's now, they call multicloud, which is kind of awkward. It feels like it's default. Like multicloud, multi-vendor, but Supercloud has much more of a comprehensive abstraction around it. What's your thoughts? >> As you said, as Dave says that too, the Supercloud has that abstraction built into it. It's built on top of cloud, right? So it's being built on top of the CapEx which is being spent by likes of AWS and Azure and Google Cloud, and many others, right? So it's leveraging that infrastructure and building software stack on top of that, which is a platform. I see that as a platform being built on top of infrastructure as code. It's another platform which is not native to the cloud providers. So it's like a kind of cross-Cloud platform. That's what I said. >> Yeah, VMware calls it that cloud-cross cloud. I'm not a big fan of the name but I get what you're saying. We had a segment on earlier with Adrian Cockcroft, Laurie McVety and Chris Wolf, all part of the Cloud RRT like ourselves, and you've involved in Cloud from day one. Remember the OpenStack days Early Cloud, AWS, when they started we saw the trajectory and we saw the change. And I think the OpenStack in those early days were tell signs because you saw the movement of API first but Amazon just grew so fast. And then Azure now is catching up, their CapEx is so large that companies like Snowflake's like, "Why should I build my own? "I just sit on top of AWS, "move fast on one native cloud, then figure it out." Seems to be one of the playbooks of the Supercloud. >> Yeah, that is true. And there are reasons behind that. And I think number one reason is the skills gravity. What I call it, the developers and/or operators are trained on one set of APIs. And I've said that many times, to out compete your competition you have to out educate the market. And we know which cloud has done that. We know what traditional vendor has done that, in '90s it was Microsoft, they had VBS number one language and they were winning. So in the cloud era, it's AWS, their marketing efforts, their go-to market strategy, the micro nature of the releasing the micro sort of features, if you will, almost every week there's a new feature. So they have got it. And other two are trying to mimic that and they're having low trouble light. >> Yeah and I think GCP has been struggling compared to the three and native cloud on native as you're right, completely successful. As you're caught up and you see the Microsoft, I think is a a great selling point around multiple clouds. And the question that's on the table here is do you stay with the native cloud or you jump right to multicloud? Now multicloud by default is kind of what I see happening. We've been debating this, I'd love to get your thoughts because, Microsoft has a huge install base. They've converted to Office 365. They even throw SQL databases in there to kind of give it a little extra bump on the earnings but I've been super critical on their numbers. I think their shares are, there's clearly overstating their share, in my opinion, compared to AWS is a need of cloud, Azure though is catching up. So you have customers that are happy with Microsoft, that are going to run their apps on Azure. So if a customer has Azure and Microsoft that's technically multiple clouds. >> Yeah, true. >> And it's not a strategy, it's just an outcome. >> Yeah, I see Microsoft cloud as friendly to the internal developers. Internal developers of enterprises. but AWS is a lot more ISV friendly which is the software shops friendly. So that's what they do. They just build software and give it to somebody else. But if you're in-house developer and you have been a Microsoft shop for a long time, which enterprise haven't been that, right? So Microsoft is well entrenched into the enterprise. We know that, right? >> Yeah. >> For a long time. >> Yeah and the old joke was developers love code and just go with a lock in and then ops people don't want lock in because they want choice. So you have the DevOps movement that's been successful and they get DevSecOps. The real focus to me, I think, is the operating teams because the ops side is really with the pressure vis-a-vis. I want to get your reaction because we're seeing kind of the script flip. DevOps worked, infrastructure's code has worked. We don't yet see security as code yet. And you have things like cloud native services which is all developer, goodness. So I think the developers are doing fine. Give 'em a thumbs up and open source's booming. So they're shifting left, CI/CD pipeline. You have some issues around repo, monolithic repos, but devs are doing fine. It's the ops that are now have to level up because that seems to be a hotspot. What's your take? What's your reaction to that? Do you agree? And if you say you agree, why? >> Yeah, I think devs are doing fine because some of the devs are going into ops. Like the whole movement behind DevOps culture is that devs and ops is one team. The people who are building that application they're also operating that as well. But that's very foreign and few in enterprise space. We know that, right? Big companies like Google, Microsoft, Amazon, Twitter, those guys can do that. They're very tech savvy shops. But when it comes to, if you go down from there to the second tier of enterprises, they are having hard time with that. Once you create software, I've said that, I sound like a broken record here. So once you create piece of software, you want to operate it. You're not always creating it. Especially when it's inhouse software development. It's not your core sort of competency to. You're not giving that software to somebody else or they're not multiple tenants of that software. You are the only user of that software as a company, or maybe maximum to your employees and partners. But that's where it stops. So there are those differences and when it comes to ops, we have to still differentiate the ops of the big companies, which are tech companies, pure tech companies and ops of the traditional enterprise. And you are right, the ops of the traditional enterprise are having tough time to cope up with the changing nature of things. And because they have to run the old traditional stacks whatever they happen to have, SAP, Oracle, financial, whatnot, right? Thousands of applications, they have to run that. And they have to learn on top of that, new scripting languages to operate the new stack, if you will. >> So for ops teams do they have to spin up operating teams for every cloud specialized tooling, there's consequences to that. >> Yeah. There's economics involved, the process, if you are learning three cloud APIs and most probably you will end up spending a lot more time and money on that. Number one, number two, there are a lot more problems which can arise from that, because of the differences in how the APIs work. The rule says if you pick one primary cloud and then you're focused on that, and most of your workloads are there, and then you go to the secondary cloud number two or three on as need basis. I think that's the right approach. >> Well, I want to get your take on something that I'm observing. And again, maybe it's because I'm old school, been around the IT block for a while. I'm observing the multi-vendors kind of as Dave calls the calisthenics, they're out in the market, trying to push their wears and convincing everyone to run their workloads on their infrastructure. multicloud to me sounds like multi-vendor. And I think there might not be a problem yet today so I want to get your reaction to my thoughts. I see the vendors pushing hard on multicloud because they don't have a native cloud. I mean, IBM ultimately will probably end up being a SaaS application on top of one of the CapEx hyperscale, some say, but I think the playbook today for customers is to stay on one native cloud, run cloud native hybrid go in on OneCloud and go fast. Then get success and then go multiple clouds. versus having a multicloud set of services out of the gate. Because if you're VMware you'd love to have cross cloud abstraction layer but that's lock in too. So what's your lock in? Success in the marketplace or vendor access? >> It's tricky actually. I've said that many times, that you don't wake up in the morning and say like, we're going to do multicloud. Nobody does that by choice. So it falls into your lab because of mostly because of what MNA is. And sometimes because of the price to performance ratio is better somewhere else for certain kind of workloads. That's like foreign few, to be honest with you. That's part of my read is, that being a developer an operator of many sort of systems, if you will. And the third tier which we talked about during the VMworld, I think 2019 that you want vendor diversity, just in case one vendor goes down or it's broken up by feds or something, and you want another vendor, maybe for price negotiation tactics, or- >> That's an op mentality. >> Yeah, yeah. >> And that's true, they want choice. They want to get locked in. >> You want choice because, and also like things can go wrong with the provider. We know that, we focus on top three cloud providers and we sort of assume that they'll be there for next 10 years or so at least. >> And what's also true is not everyone can do everything. >> Yeah, exactly. So you have to pick the provider based on all these sort of three sets of high level criteria, if you will. And I think the multicloud should be your last choice. Like you should not be gearing up for that by default but it should be by design, as Chuck said. >> Okay, so I need to ask you what does Supercloud in my opinion, look like five, 10 years out? What's the outcome of a good Supercloud structure? What's it look like? Where did it come from? How did it get there? What's your take? >> I think Supercloud is getting born in the absence of having standards around cloud. That's what it is. Because we don't have standards, we long, or we want the services at different cloud providers, Which have same APIs and there's less learning curve or almost zero learning curve for our developers and operators to learn that stuff. Snowflake is one example and VMware Stack is available at different cloud providers. That's sort of infrastructure as a service example if you will. And snowflake is a sort of data warehouse example and they're going down the stack. Well, they're trying to expand. So there are many examples like that. What was the question again? >> Is Supercloud 10 years out? What does it look like? What's the components? >> Yeah, I think the Supercloud 10 years out will expand because we will expand the software stack faster than the hardware stack and hardware stack will be expanding of course, with the custom chips and all that. There was the huge event yesterday was happening from AWS. >> Yeah, the Silicon. >> Silicon Day. And that's an eyeopening sort of movement and the whole technology consumption, if you will. >> And yeah, the differentiation with the chips with supply chain kind of herding right now, we think it's going to be a forcing function for more cloud adoption. Because if you can't buy networking gear you going to go to the cloud. >> Yeah, so Supercloud to me in 10 years, it will be bigger, better in the likes of HashiCorp. Actually, I think we need likes of HashiCorp on the infrastructure as a service side. I think they will be part of the Supercloud. They are kind of sitting on the side right now kind of a good vendor lost in transition kind of thing. That sort of thing. >> It's like Kubernetes, we'll just close out here. We'll make a statement. Is Kubernetes a developer thing or an infrastructure thing? It's an ops thing. I mean, people are coming out and saying Kubernetes is not a developer issue. >> It's ops thing. >> It's an ops thing. It's in operation, it's under the hood. So you, again, this infrastructure's a service integrating this super pass layer as Dave Vellante and Wikibon call it. >> Yeah, it's ops thing, actually, which enables developers to get that the Azure service, like you can deploy your software in sort of different format containers, and then you don't care like what VMs are those? And, but Serverless is the sort of arising as well. It was hard for a while now it's like the lull state, but I think Serverless will be better in next three to five years on. >> Well, certainly the hyperscale is like AWS and Azure and others have had great CapEx and investments. They need to stay ahead, in your opinion, final question, how do they stay ahead? 'Cause, AWS is not going to stand still nor will Azure, they're pedaling as fast as they can. Google's trying to figure out where they fit in. Are they going to be a real cloud or a software stack? Same with Oracle. To me, it's really, the big race is now with AWS and Azure's nipping at their heels. Hyperscale, what do they need to do to differentiate going forward? >> I think they are in a limbo. They, on one side, they don't want to compete with their customers who are sitting on top of them, likes of Snowflake and others, right? And VMware as well. But at the same time, they have to keep expanding and keep innovating. And they're debating within their themselves. Like, should we compete with these guys? Should we launch similar sort of features and functionality? Or should we keep it open? And what I have heard as of now that internally at AWS, especially, they're thinking about keeping it open and letting people sort of (inaudible)- >> And you see them buying some the Cerner with Oracle that bought Cerner, Amazon bought a healthcare company. I think the likes of MongoDB, Snowflake, Databricks, are perfect examples of what we'll see I think on the AWS side. Azure, I'm not so sure, they like to have a little bit more control at the top of the stack with the SaaS, but I think Databricks has been so successful open source, Snowflake, a little bit more proprietary and closed than Databricks. They're doing well is on top of data, and MongoDB has got great success. All of these things compete with AWS higher level services. So, that advantage of those companies not having the CapEx investment and then going multiple clouds on other ecosystems that's a path of customers. Stay one, go fast, get traction, then go. >> That's huge. Actually the last sort comment I want to make is that, Also, that you guys include this in the definition of Supercloud, the likes of Capital One and Soner sort of vendors, right? So they are verticals, Capital One is in this financial vertical, and then Soner which Oracle bar they are in this healthcare vertical. And remember in the beginning of the cloud and when the cloud was just getting born. We used to say that we will have the community clouds which will be serving different verticals. >> Specialty clouds. >> Specialty clouds, community clouds. And actually that is happening now at very sort of small level. But I think it will start happening at a bigger level. The Goldman Sachs and others are trying to build these services on the financial front risk management and whatnot. I think that will be- >> Well, what's interesting, which you're bringing up a great discussion. We were having discussions around these vertical clouds like Goldman Sachs Capital One, Liberty Mutual. They're going all in on one native cloud then going into multiple clouds after, but then there's also the specialty clouds around functionality, app identity, data security. So you have multiple 3D dimensional clouds here. You can have a specialty cloud just on identity. I mean, identity on Amazon is different than Azure. Huge issue. >> Yeah, I think at some point we have to distinguish these things, which are being built on top of these infrastructure as a service, in past with a platform, a service, which is very close to infrastructure service, like the lines are blurred, we have to distinguish these two things from these Superclouds. Actually, what we are calling Supercloud maybe there'll be better term, better name, but we are all industry path actually, including myself and you or everybody else. Like we tend to mix these things up. I think we have to separate these things a little bit to make things (inaudible) >> Yeah, I think that's what the super path thing's about because you think about the next generation SaaS has to be solved by innovations of the infrastructure services, to your point about HashiCorp and others. So it's not as clear as infrastructure platform, SaaS. There's going to be a lot of interplay between this levels of services. >> Yeah, we are in this flasker situation a lot of developers are lost. A lot of operators are lost in this transition and it's just like our economies right now. Like I was reading at CNBC today, and here's sort of headline that people are having hard time understanding what state the economy is in. And so same is true with our technology economy. Like we don't know what state we are in. It's kind of it's in the transition phase right now. >> Well we're definitely in a bad economy relative to the consumer market. I've said on theCUBE publicly, Dave has as well, not as aggressive. I think the tech is still in a boom. I don't think there's tech bubble at all that's bursting, I think, the digital transformation from post COVID is going to continue. And this is the first recession downturn where the hyperscalers have been in market, delivering the economic value, almost like they're pumping on all cylinders and going to the next level. Go back to 2008, Amazon web services, where were they? They were just emerging out. So the cloud economic impact has not been factored into the global GDP relationship. I think all the firms that are looking at GDP growth and tech spend as a correlation, are completely missing the boat on the fact that cloud economics and digital transformation is a big part of the new economics. So refactoring business models this is continuing and it's just the early days. >> Yeah, I have said that many times that cloud works good in the bad economy and cloud works great in the good economy. Do you know why? Because there are different type of workloads in the good economy. A lot of experimentation, innovative solutions go into the cloud. You can do experimentation that you have extra money now, but in the bad economy you don't want to spend the CapEx because don't have money. Money is expensive at that point. And then you want to keep working and you don't need (inaudible) >> I think inflation's a big factor too right now. Well, Sarbjeet, great to see you. Thanks for coming into our studio for our stage performance for Supercloud 22, this is a pilot episode that we're going to get a consortium of experts Cloud RRT like yourselves, in the conversation to discuss what the architecture is. What is a taxonomy? What are the key building blocks and what things need to be in place for Supercloud capability? Because it's clear that if without standards, without defacto standards, we're at this tipping point where if it all comes together, not all one company can do everything. Customers want choice, but they also want to go fast too. So DevOps is working. It's going the next level. We see this as Supercloud. So thank you so much for your participation. >> Thanks for having me. And I'm looking forward to listen to the other sessions (inaudible) >> We're going to take it on A stickers. We'll take it on the internet. I'm John Furrier, stay tuned for more Supercloud 22 coverage, here at the Palo Alto studios in one minute. (bright music)

(calm music) >> Okay, welcome back everyone to theCUBE's live coverage here on the floor at Moscone south in San Francisco California for AWS summit, 2022. This is part of their summit conferences, not re:Invent it's kind of like becoming like regional satellite, mini re:Invents, but it's all part of education developers. Of course theCUBE's here. We're going to be at the AWS summit in New York city, only two this year. And this summer check us out. Of course, re:MARS is another event we're going to be going to so check us out there as well. And of course re:Invent at the end of the year and re:Inforce the security conference in Boston. So, Sarbjeet Johal, our next guest here. CUBE alumni, CUBE influencer, influencer in the cloud industry. Sarbjeet great to see you. Thanks for coming on. Oh, by the way, we'll be at Boston re:Inforce, re:Invent in December, re:MARS which is the robotics AI show, and of course the summit here in San Francisco and New York city, the hot areas. >> That's cool. >> Great to see you. >> Good to see you too. >> Okay. I got a lot of data to report. You've been on the floor talking to people. What are you finding out? What's the report? >> The report is actually, I spoke to three people from AWS earlier. As said one higher up guy from the doctor, Casey Tan. He works on French SaaS chips and he gave me a low down on how that thing works. And there's a systolic arrays TPUs, and like a lot of insider stuff >> Like deep Silicon chip stuff. >> Yes. And that they're doing some great stuff there. And of course that works for us at scale and for cloud guys it's all about scale. If you're saving pennies at that scale, you're saving millions and maybe hundreds of millions at some point. Right? So that was one. And I also spoke to the analytics guys and they gave me some low-down on the Glue announcements. How the big data processing is happening at AWS and how they are now giving you the ability where your infrastructure hugs your demand. So you're not wasting any sources. So that was a number one complaint with the Glue from AWS. So that was one. And then I did the DeepRacing race and my timings were like number 78. So. >> You got some work to do. You download your machine learning module. >> No, I will do that and then play with it. Yes. I will train one. >> You like a simulation too? >> Yeah. Yeah. I will do that simulation, yes. >> What else? Anything jump off the page for you. What's the highlight if you could point at something? Did anything pop up at you in this event with AWS? Was there any aha moment or something that just jumps off the page? >> I think it was mainly sort of incremental to be honest with you. And the one thing-- >> Nothing earth shattering >> Nothing earth shattering and that at the summit it's like that, you know, like it but they are doing new announcements of like almost every day with new services. So I would go home and read on that but there are some patterns that we are seeing emerging and there are some folks very active on Twitter. Mark in recent just did very controversial kind of tweet couple of days back. That was, that was hard. >> Was he shit posting again? >> Shit posting. Yeah. He was shit posting actually, according to actually I saw Corey as well on the floor, Corey and Rodrigo. And, and-- >> Did you see Corey's interview with me? We were talking about shit posting 'cause he wrote in this newsletter. Mark and recently Elon Musk, they're all kind of like they're really kind of active on Twitter with a lot of highly intelligent snarkiness. >> They're super intelligent and they know the patterns, they know the economics and technology. Super smart guys and yeah. Who is in control, there was a move from the middle seat and social media kind of side of things where people are controlling the narratives and who controls the narrative. Is it billionaires? Is it government? We see that. >> Well I mean, it's interesting seeing the power. I mean, I call it the revenge of the nerds. You got the billionaires who are looking at the political screw-ups that Facebook and others have done. And by not being clear and it's hard, it's a hard problem to solve. I don't really want to be in their seat. Even Andy Jassy is the CEO of AWS. What is he? I mean, he's dealing with problems that for some people would be their worst part of like they could ever dream of scenario. He's dealing with that at breakfast. And then throughout his day, he's got all kinds of Amazon's so big and Apple and you got Google and you got the fan companies. So, you know, at some point tech is now so part of society, it's not just the nerds from California. It's tech is in everything now. So it's a societal impact. And so there's consequences for stuff. And so you're starting to see this force for good that's come from the sustainability angle. You're going to start to see force for good with technology as it relates to people's lives. And we had Mapbox on the CUBE and they provide all this navigation and Gareth the guy who runs that division, he talks about dark kitchens, dark stores. So just they're re-engineering the supply chain of delivery. So we all been to restaurants and seen people there from picking up food delivery. Why are they going to the retail? So dark kitchens are just basically depots for supplying the 10 menus that everyone orders from. That's a change of a structural change in the industry. So that's jumped out at me, Matt Wood spoke to me about serverless impact to the analytics team. And again, structural changes, technical and culture. Right? So, so you're starting to see to me more and more of the two themes of some technology change, architectural change, system change and culture thinking. And you know, we had a 20 year old guest on here who was first worked at Amazon web services when he was 16. >> Wow. >> Graduated high school early and went into Amazon. He's like, I love tools. So people love tools. Hardware is coming back. Right? So I mean Sarbjeet this is crazy. >> It's crazy. >> What's going on. >> It's crazy actually. Remember the nine year old kid at re:Invent 2019. Karthick was the name if I remember, but I spoke to him and he was crazy. He was AWS certified and kids are playing with this technology in their high schools. >> It's awesome. >> And even in their elementary schools now. >> They can get their hands on it quicker. They don't need to go in full class for a year. They can self-teach, they can do side projects they can launch a side hustle, they can stand up a headless retail outlet, who knows what they can do if you got the Lego blocks. This is what I love about the cloud, you can really show something fast and then abandon it. >> Actually, I think it is all enabled through cloud. Like the accessibility of technology has gone like exponentially, like wildfire. Like once you have access to the cloud just all you need is connection to the internet. After that you have the VMs. and you have the serverless, there's zero cost to you. And things are thrown at you. Somebody who was saying that earlier here like we have said that many times it's like that's how the drug dealer, you know, sell the drug. Like sniff it, it's free, >> First is free. >> So they're doing it. Yes. >> We say that about theCUBE. >> And from the, I see cloud from two different angles, like we all do. And like, I try to sort of force myself to look at it from the both angles. There's the supplier side and the buyer side or the consumer side on the other side. Right? So from the supplier side, it's a race for talent to build it, number one, then number two is race for talent to train them. So we saw the numbers and millions being shown today at the keynote again. And Google is showing those numbers as well. Like how many millions they are training like 25 to 30 million people within next two, three years. It's crazy numbers. >> Sarbjeet I got to say so if I have to look at what jumped off the page for me on this event, was couple things and this is kind of weird nuanced stuff but I'll just try to explain it as best I can. Number one, we're going to see more managed services like DevOps managed services. As DevOps teams grow, talent is a problem. And Kubernetes obviously is growing and got to get that right. It's not easy to be a Kubernetes, you know slinging clusters around with Kubernetes. It's hard. I think that's got to get easier. So I think the path to easy is going to be some sort of abstraction service layer. And I think the smart people are going to have this layer will manage it and then provide that as a service, number one. Number two is this notion of a systems design thinking around elements, whether it's storage or maps for like Mapbox and around these elements they have to have a systematic effect of other things. You can't just, if it changes, it's going to have consequences that's what systems do. So, tooling being built around these elements and they have to have hardened APIs that is clear. People who are trying to be "cloud native" need to get this right. And you have to have the tooling in and around the the element and then have APIs to connect and then glue up. So it's interesting. Clearly those things are happening and multiple conversations, people were teasing that out. And then obviously the super cloud was coming in. >> Is there. >> Mapbox is basically a super cloud. They're like what snowflake is for data analytics. They are for-- >> MongoDB is another one. >> MongoDB's got Atlas. I mean, MongoDB was criticized for years. Doesn't scale. Remember the old lamp stack days, they were preferred. They're document, they nailed it with document. The document aspects of data, but they were always getting criticized. They can't scale. And they just keep scaling. But now with Atlas, they're on AWS. It's just, auto scale. So that's killer for MongoDB. So I think their stock price is undervalued my opinion but you know, I don't give legal advice. >> I think that the whole notion of-- >> Or financial advice. >> The multicloud, right? So for a multicloud to kill that complexity of multicloud, we have to go to the what Dave Vellante and you guys say super cloud, right? Another level of abstraction on top of infrastructure provider by AWS, Google cloud, Azure. So that's where we're going. >> Well, Dave and I debate this right, he bundles multi-cloud in there and most people think that's what he's saying but I'm saying multi-cloud is a reality. I mean, multi-cloud means you're going to have multiple clouds. They're just not you're not sharing workloads across those clouds. It's like not the same workload. That's not going to yet happen. I run Azure because I have 365, that's it. I run Amazon for everything else. That's kind of the use case. But to me, super cloud is building on top of AWS or Azure where you leverage their CapEx and create differentiated value. It's your own cloud without all the CapEx but it's got to be like super integrated and the benefit's got to be so good that it seems like pennies to your point earlier. >> Yeah. >> And the economics to the applications in it are just so obvious and they got to be they got to be so big for the application developer. So that's to me is super cloud. And then of course having the connected tissue to manage the transit around multiple clouds. >> Yeah. I think they have it too. I totally agree with you. But another thing is from having the developer background I think the backward compatibility is a huge issue in cloud. >> Yeah. I agree. >> It's a lot of technical debt being built and I hear that, I'm hearing that more and more. I think that we have to solve as industry as like these three main players have to solve that problem. So that's one big thing, actually. I'm very like after, you know, like to talk about it and all that stuff. So yeah. It's another thing is another pattern actually to all the cloud naysayers out there, right? Is that those are the people who come from the hardware background. So I've seen another pattern out there. So I'm trying to synthesize, who are these people who bash cloud all the time? I'm pro-cloud of course everybody knows that. >> We know you're pro, we're all pro cloud. We're totally biased. We love cloud >> Actually. No, I've seen both sides. I've seen both sides. I've worked at EMC, VMware, I worked at Oracle cloud as well. And then, and before that I have written a lot of software. A software developer is pro-cloud. A typical hardware ops guy or girl, they are pro on-prem or pro hybrid and all that. Like they try to keep it there. >> I think first of all, I have opinion on this. I think, I think you're right. But how hardware is coming back, if you look at how cloud is enabling hardware, it's retro, it's designed for the cloud. So hardware's going to offload, either accelerate stuff and offload stuff from the software guide. So look at DeepRacer it's hardware. Now it's a car. You've got the silicon and the chips. So the chips you're talking about. Those aren't chips for service and the data center. They're just chips to make the software in the cloud run better. >> Sarbjeet: Well scale. >> So scaling. And so I think we're going to see a Renaissance in hardware. It's going to look different. It's going to act different. So we're watching this. I mean, you brought up the idea of having a CUBE hardware box. >> Yeah. It's a great idea. >> It's a good idea. DM me and tell me it's a bad idea or good idea. I'll blame Sarbjeet for that. But what else have you learned? >> What else have learnt actually it's basically boils down to economics at the end of the day. It's about moving fast. It's about having developer productivity, again going back the cloud naysayers. It's like, why did you build a bike? Remember Steve Job used to say that, "computer is the bicycle for the human minds." >> Yes. >> Right. So cloud is the bicycle for the enterprises. They makes them move faster. 'So I think that's-- >> All right. We're closing down. We're going to hold on until they pull the plug on theCUBE literally. Sarbjeet great to see you on there. Check 'em out on Twitter. Great event. Good to see you, great report. Thank for sharing. Sarbjeet Johal here on theCUBE, taking over our community site I hear, right? Now you going to work-- >> I'm there. I'm always there. >> Great to have you on. I'm going to work on some new things with theCUBE. Really appreciate working with us. Thanks a lot. >> I really appreciate you guys giving me this platform. It's an amazing platform. Thank you very much. >> That's all right. We'll be back. That's it for our coverage of AWS summit 2020 here live on the floor. Events are back. Hybrid's back. We get theCUBE studios in Palo Alto in Boston. Re:invent at the end of the year but we're going to the summit in New York city. In the summer, we got re:Inforce in Boston the security conference. Re:MARS which is the robotics IML conference. And of course the big summit New York and San Francisco we're there of course. Share thecube.net for all the action. I'm John for your host with Sarbjeet here. Closing out the show. Thanks for watching. (Calm music)

>> Welcome back everyone. CUBE live coverage here in Las Vegas for AWS Amazon Web Services, reinvent 2021. In person event on the floor, back in business, theCUBE. Two live sets pumping out content left and right. Three and a half days of wall to wall overage, over 120 interviews, stream 28 hours literally on the main site as well as on the CUBE zone. Go to CUBEreinvent.com to get all the action, all the videos will be there. Of course theCUBE.net. I'm John Furrier, your host, with Dave Nicholson my cohost this week and Sarbjeet Johal cloud strategist, influencer, all around great guy, CUBE alumni, here to break down reinvent in context to the cloud industry. Sarbjeet, great to see you, thanks for coming on. >> Good to see you guys in person finally. >> I'm so excited. I did all these interviews the past two years in person and I've been remote, now were in person, great to do it, everyone's excited. 27,000 people here at reinvent. Stand in line for classes. By the way, they're not offering these classes online, only the leadership classes and the keynote. If you're not here, you're not getting the classes. >> I like the vibe actually. I thought it would be more subdued but it is better than what I thought and energy is here. It's not like 2019, it's not. >> That's 60,000 people, you couldn't even get through the hallway. Any company would love to have 27,000 people but I got to say, this year we were just talking earlier on the segment this morning, I wanted to get your thoughts on this, you go back 15 years ago when AWS rolled out, you have EC2, S3, SQS, you had to roll your own. Basically your alternative was better than building a data center or hosting on a colo. So great, check, you don't have to buy the technology tax. I think you had to fill in the glue layers, you had to kind of roll your own and build it up. Now everyone is scaling up and next gen cloud is a completely different architecture. You got serverless, you got all the glue layers pretty much there, and you can still add stuff on it, so a completely different mindset. Changing the startup speed game. Changing the enterprise. Looking pretty good. What's your reaction to the new architecture in cloud vis a vis where it came from? >> My reaction to the new architecture is that number one it's just new. We change stuff all the time in software stacks and what I was grasping within myself sitting in my hotel in the morning listening to Warner's keynote was that we have started to accumulate the technology debt even in cloud. We cooked up some some stuff with the scripts and we automated stuff with programing, language of your choice, or CLIs. Then became the cloud formation automation, orchestration of your cloud stack, if you will. Then Hashicorp are like, so Hashicorp are sitting on the side there. But now there's another abstraction layer on top of that which was announced during Warner's keynote today. I think the new abstraction layers leave the pervious architectures a little stale. It's always like, what should you do? Should you refactor your existing stacks or should you not touch that? Just go from now on on the new architecture? I think it's getting busy, complicated, a lot of number of services. >> What do you think other people are saying? I saw you did a little snippet with Dion Hinchcliffe online, nice Tweet there, you got a big video coming out. As you talk to other folks and influencers and people in the front lines, what are they saying about Amazon Reinvent this year? >> I think almost everybody's saying that number of services is expanding exponentially. I was thinking that 200 plus number of services or whatever that number is today, it's mind boggling. I totally understand that when you have two teams that they want to take the credit for creating a new service and they want to publish it. They want to do a press release and all that. But my request to all cloud providers, mainly three, is to not call everything a new service. Call that feature of a service. So number of services has to be reduced, collapsed if you will. We need umbrella services and then under that there should be features of services, that's one thing. Another feedback I got from some second tier partners is that they have the competency program for partners. They announced that. They had that earlier but new competencies. It leaves the second or third tier partners in the cold. Only the first tier partners can get those competencies because for that they have to send a lot of money, train people, then they get that check box, oh, you can do this. >> This whole services thing and what you call a service, if you called everything a service a new feature of DNS or a new thing here and there, serverless, there's be thousands of features, services. I think Amazon, I think they culled it down to like, 200, is the number we hear. >> But isn't that part of the role of the partner, the services provider, the consultancy, to act as a bridge between all of those services and features, whatever you want to call them and figuring out exactly what the end user customer actually needs? The idea that AWS is messaging here is targeted directly towards end user customers. There's a lot to be desired there because how do you translate that? I'm thinking, compare and contrast that with the Steve Jobs approach of there shall be three. There will be a large, a medium and a small. I know that this is more complex, but when you come out and you say, 475 different kinds of instances, you're leaving that to your partners to translate. To your point, if you're segregating those partners into categories where only a top tier has access to everything, interesting place to be. >> A couple of discussions I had with partners was that I actually suggested them to create a bank of reference architectures, we call that in Amazon terms. But it's not only technical side of things, but business as well. They need to create some principle based architectures and have a bank of that and then prescribe that to their customers base. I think that's the only way to simplify these things because as you said, if you have 200 different types of instances, for instance, (laughs), it is hard. It is really hard. >> I want to get your thoughts, we talk about this on Twitter all the time so the folks watching, if you want to follow our rants and raves on Twitter, follow us on Twitter you'll get all the action, all the influencers are there. Competition. I've been ranting all week and been saying it for a long time, Microsoft's not even close to Amazon. I'm a bit over the top but I'll just say that if Amazon goes unchecked, Microsoft's ecosystem's going to get decimated. Why would I want to run software, my software, on a suboptimal performance infrastructure? Microsoft had Windows back in the day and had the system software and the application suite but they encouraged developers to build on top of Windows. Their "dot net" or ecosystem. That game's over. I guess Window's runs on Amazon too, whatever. But now the cloud is the Windows. The cloud is the system software. So developers are running on top of the cloud. >> Yes. >> So who wins? >> I think Open wins. Not Open-source. Open-source and Open are different things, we always discuss that. I think Open wins, the close systems have this problem of protectionism which doesn't work, with our little kids at home or your economy as whole. When you protect your local industry, the economy goes down. I've seen that, I'm an economist by education as you guys know. >> Yes. >> I think it's the same, when you protect too much of whatever you have, I think it's has a worse effect. But there's one narrative, Satya sort of narrates if you will, he says that, hey, when you use Windows, you keep everything, 100%. We are not taking a cut. When you're sitting in a cloud marketplace, somebody's getting a cut. That's the argument. >> Terry Chen said, because he puked on what I said, he said better could win. >> Yes. >> That's one thing. Okay, I buy that. Azure could be better in some use cases. But I think over all Amazon wins hands down currently. Certainly with the custom processors. >> You haven't mentioned GCP. >> Actually GCP. >> What can you say about it? >> What you could say is that AWS right now has either constructed or is benefiting from the highest barrier to entry to any business in the history of our planet. You can look at the investment that GCP is making to the tune of six billion dollars a year to go after market share. Are they going after current market share which is arguably the 20% of IT that's in cloud now? Or are they going for future market share which is a piece of the larger pie? When you talk about who wins, I think it's still possible for- >> Hold on, hold on. >> You left Oracle out. I think it's still possible. >> Hold on, hold on, hold on. >> I can tell you about Oracle. >> Hold on, hold on. This is a thought exercise, I'm going to ask you guys this question. It may be rhetorical, you don't need to answer it. If you went to all the people out there buying Azure and GCP, no offense guys, and you said, "Put aside all your credits you've been given, how much are you actually using?" If you take the incentives away, why are you on those clouds from a performance perspective? >> Sorry to cut you off. We know that Oracle uses incentives, X codes, leads for sale, and all that stuff, we know that. A lot of people know that. So cloud became shelfware there, we know the story. I'm leaving Oracle to the side. But I think Google has legs. Google's cloud has legs. They are a very enduring focus company. They are more open-source friendly and data science friendly as well. I think they are actually a number two, personally I believe. I'm a developer by heart, so they are number two developer cloud after Amazon. >> I think it's well know, I agree with you by the way. I think people may not know this but it's well known in the industry that Amazon has been mostly afraid of Google more than Microsoft. I think now because of this market share, the ecosystem war that's going to happen in a very short period of time, Microsoft's more of a threat on paper. But Google's got more threat to sling shot back and front technically because if you look at Graviton, the stack that they're building for ISVs and developers, Amazon's clearly winning. Google can pull that off. If they get it, they got to have their own way. >> Let me tell you, the one thing actually, if we want to know what was the fumble this time? I have some, actually I will talk about it in my radio, if you have enough time here. I think Google will do better because they're open and Amazon is complex. I was thinking during the keynotes, what are the clues to Amazon, AWS, leaving which is helping Google and Azure, mainly Google. Google is simple actually, a lot simpler to use, but again having said that, there's one thing actually, the new term I'm trying to define is the feature proximity. Amazon has feature proximity, like the best. When you are doing one thing and you want to do another thing, they have that all right there. They're ahead of the game. They have their 5G, private 5G on all their stuff, it's very futuristic. >> By the way, I got Amazon to agree to get me some private 5G for when we go back home. We're going to setup an outdoor area for some open CUBE action with some 5G. >> Actually we could put that on a nice van with the logos and all that. We could move around. >> We'll park it right there on El Camino, right next to Stanford University. Maybe we could live in one of those things too. >> Make it a taco truck and I'll join you guys. >> (laughs) Taco truck for free food. >> Yeah, let's do that. >> All seriousness guys, I want to get your thoughts as we wrap up this segment on the analysis of the cloud industry. What do you guys think, your opinion, it's going to take, I'll start by saying I think Amazon, if not contested for their leadership in the performance of silicon and the stack for software developers and owners to run the fastest they can run away with this. I think Microsoft and Google better be cranking right now to make it easy and have silicon advantage as well. I think clearly if the ecosystem's going to be at play, because the shift is happening to modernize software development, low code, no code, every shift everyone will go to the best performance, independent of cost and incentives. Amazon's got lower cost too so they got the fly wheel going. >> I can make mine short. I think GCP can also be successful. But I think already the amount of momentum that AWS has, the wind behind it's sails, I was at EMC for many years and we used to joke about our arch nemesis Hitachi Data Systems and saying that they were quite discouraged every morning as they woke up learning that they were a year further behind. Every night they went to sleep. They woke up the next day and they were a year further behind. Watching the announcements coming out of this event this week, I think there are some people at GCP and Microsoft and others who have that sense. But having said that, we're at the dawn of at era of cloud. There's plenty of room for a lot of players. When you give us your thoughts, I'd like your answer to the question, how much are consumers in the driver's seat today? Will the customers be able to demand multi sourcing? >> I think customers, you work with your money. Customers can demand that but at the same time customers can get stuck in a platform and they can't get out. We usually talk about when to lock in. There's one thing that Amazon keeps saying that we are open, we are open and the other vendors are like, these brands. I think that kind of narrative can come bite back to them. It's not a good thing to say. You don't want to be cocky about your features or you are the best and all that stuff. I think you want to stay humble and respect the other guys as well because they are coming right behind you. I think the key is developers. I have the bias towards developers because I was a developers but I totally believe deep down, actually I have tried to put my developer hat off and still think that way about these constructs. Developers are the people who call the shots. If you are not developer friendly you can't do much. >> That's a good point. >> That's my warning to Amazon. Don't go away from developers. You are number one developer cloud, stay there. This refocus is good, but put that to the side, not make that front center. Google has made that front center, I think that's a mistake. >> Yeah, you have the features, the right features, but again, speed, performance. Developers, capture the opportunity. Developers want to move fast. That's the entrepreneurship. Sarbjeet, great to have you on theCUBE, great to see you. >> Thanks for having me here, I enjoyed it. Great set here. >> All right, Dave Nicholson's here. Dave Nicholson, CUBE host. I'm John Furrier. You're watching theCUBE, the world leader in technology coverage. We'll be back with more live coverage from Reinvent after this short break. (upbeat music)

>>From around the globe. It's the queue with digital coverage of AWS reinvent 2020 sponsored by Intel, AWS and our community partners. >>Welcome back to the cubes. Live coverage for ADFS reinvent 2020 I'm John Ford with the cube, your host. We are the cube virtual. We're not there in person this year. We're remote with the pandemic and we're here for the keynote analysis for Verner Vogels, and we've got some great analysts on and friends of the cube cube alumni is Rob Hirschfeld is the founder and CEO of Rakin a pioneer in the dev ops space, as well as early on on the bare metal, getting on the whole on-premise he's seen the vision and I can tell you, I've talked to him many times over the years. He's been on the same track. He's on the right wave frog. Great to have you on. I'm going to have to start Veatch, come on. Y'all come on as well, but great to see you. Thanks, pleasure to be here. Um, so the keynote with Verna was, you know, he's like takes you on a journey, you know, and, and virtual is actually a little bit different vibe, but I thought he did an exceptional job of stage layout and some of the virtual stage craft. Um, but what I really enjoyed the most was really this next level, thinking around systems thinking, right, which is my favorite topic, because, you know, we've been saying, going back 10 years, the cloud is just, here's a computer, right. It's operating system. And so, um, this is the big thing. This is, what's your reaction to the keynote. >>Wow. So I think you're right. This is one of the challenges with what Amazon has been building is it's, you know, it is a lock box, it's a service. So you don't, you don't get to see behind the scenes. You don't really get to know how they run these services. And what, what I see happening out of all of those pieces is they've really come back and said, we need to help people operate this platform. And, and that shouldn't be surprising to anyone. Right? Last couple of years, they've been rolling out service, service service, all these new things. This talk was really different for Verner's con normal ones, because he wasn't talking about whizzbang new technologies. Um, he was really talking about operations, um, you know, died in the wool. How do we make the system easier to use? How do we expose things? What assistance can we have in, in building applications? Uh, in some cases it felt like, uh, an application performance monitoring or management APM talk from five or even 10 years ago, um, canaries, um, you know, Canary deployments, chaos engineering, observability, uh, sort of bread and butter, operational things. >>We have Savi Joel, who's a influencer cloud computing Xtrordinair dev ops guru. Uh, we don't need dev ops guru from Amazon. We got Sarpy and prop here. So it'd be great to see you. Um, you guys had a watch party. Um, tell me what the reaction was, um, with, of the influencers in the cloud or ADI out there that were looking at Vernon's announcement, because it does attract a tech crowd. What was your take and what was the conversation like? >>Yeah, we kinda geeked out. Um, we had a watch party and we were commenting back and forth, like when we were watching it. I think that the general consensus is that the complexity of AWS stack itself is, is increasing. Right. And they have been focused on developers a lot, I think a lot longer than they needed to be a little bit. I think, uh, now they need to focus on the operations. Like we, we are, we all love dev ops talks and it's very fancy and it's very modern way of building software. But if you think deep down that, like once we developed software traditionally and, and also going forward, I think we need to have that separation. Once you develop something in production, it's, it's, it's operating right. Once you build a car, you're operating car, you're not building car all the time. Right? >>So same with the software. Once you build a system, it should have some stability where you're running it, operating it for, for a while, at least before you touch it or refactoring all that stuff. So I think like building and operating at the same time, it's very good for companies like Amazon, AWS, especially, uh, and, and Google and, and, and Facebook and all those folks who are building technology because they are purely high-tech companies, but not for GM Ford Chrysler or Kaiser Permanente, which is healthcare or a school district. The, they, they need, need to operate that stuff once it's built. So I think, uh, the operationalization of cloud, uh, well, I think take focus going forward a lot more than it has and absorbable Deanna, on a funny note, I said, observability is one of those things. I, now these days, like, like, you know, and the beauty pageants that every contestant say is like, whatever question you asked, is it Dora and the answer and say at the end world peace, right? >>And that's a world peace term, which is the absorbability. Like you can talk about all the tech stuff and all that stuff. And at the end you say observability and you'll be fine. So, um, what I'm making is like observability is, and was very important. And when I was talking today about like how we can enable the building of absorbability into this new paradigm, which is a microservices, like where you pass a service ID, uh, all across all the functions from beginning to the end. Right. And so, so you can trace stuff. So I think he was talking, uh, at that level. Yeah. >>Let me, let's take an observer Billy real quick. I have a couple of other points. I want to get your opinions on. He said, quote, this three, enabling major enabling technologies, powering observability metrics, logging and tracing here. We know that it would, that is of course, but he didn't take a position. If you look at all the startups out there that are sitting there, the next observability, there's at least six that I know of. I mean, that are saying, and then you got ones that are kind of come in. I think signal effects was one. I liked, like I got bought by Splunk and then is observability, um, a feature, um, or is it a company? I mean, this is something that kind of gets talked about, right? I mean, it's, I mean, is it really something you can build a business on or is it a white space? That's a feature that gets pulled in what'd you guys react to that? >>So this is a platform conversation and, and, you know, one of the things that we've been having conversations around recently is this idea of platforms. And, and, you know, I've been doing a lot of work on infrastructure as code and distributed infrastructure and how people want infrastructure to be more code, like, which is very much what, what Verna was, was saying, right? How do we bring development process capabilities into our infrastructure operations? Um, and these are platform challenges. W what you're asking about from, uh, observability is perspective is if I'm running my code in a platform, if I'm running my infrastructure as a platform, I actually need to understand what that platform is doing and how it's making actions. Um, but today we haven't really built the platforms to be very transparent to the users. And observability becomes this necessary component to fix all the platforms that we have, whether they're Kubernetes or AWS, or, you know, even going back to VMware or bare metal, if you can't see what's going on, then you're operating in the blind. And that is an increasingly big problem. As we get more and more sophisticated infrastructure, right? Amazon's outage was based on systems can being very connected together, and we keep connecting systems together. And so we have to be able to diagnose and troubleshoot when those connections break or for using containers or Lambdas. The code that's running is ephemeral. It's only around for short periods of time. And if something's going wrong in it, it's incredibly hard to fix it, >>You know? And, and also he, you know, he reiterated his whole notion of log everything, right? He kept on banging on the drum on that one, like log everything, which is actually a good practice. You got to log everything. Why wouldn't you, >>I mean, how you do, but they don't make it easy. Right? Amazon has not made it easy to cross, cross, and, uh, connect all the data across all of those platforms. Right? People think of Amazon as one thing, but you know, the people who are using it understand it's actually a collection of services. And some of those are not particularly that tied together. So figuring out something that's going on across, across all of your service bundles, and this isn't an Amazon problem, this is an industry challenge. Especially as we go towards microservices, I have to be able to figure out what happened, even if I used 10 services, >>Horizontal, scalability argument. Sorry. Do you want to get your thoughts on this? So the observability, uh, he also mentioned theory kind of couched it before he went into the talk about systems theory. I'm like, okay. Let's, I mean, I love systems, and I think that's going to be the big wake up call here for the next 10 years. That's a systems mindset. And I think, you know, um, Rob's right. It's a platform conversation. When you're thinking about an operating system or a system, it has consequences when things change, but he talked about controllability versus, uh, observability and kinda T that teed up the, well, you can control systems controls, or you can have observability, uh, what's he getting at in all of this? What's he trying to say, keep, you know, is it a cover story? Is it this, is it a feature? What was the, what was the burner getting at with all this? >>Uh, I, I, I believe they, they understand that, that, uh, that all these services are very sort of micro in nature from Amazon itself. Right. And then they are not tied together as Rob said earlier. And they, he addressed that. He, uh, he, uh, announced that service. I don't know the name of that right now of problem ahead that we will gather all the data from all the different places. And then you can take a look at all the data coming from different services at this at one place where you have the service ID passed on to all the servers services. You have to do that. It's a discipline as a software developer, you have to sort of adhere to even in traditional world, like, like, you know, like how you do logging and monitoring and tracing, um, it's, it's your creativity at play, right? >>So that's what software is like, if you can pass on, I was treating what they gave an example of Citrix, uh, when, when, when you are using like tons of applications with George stream to your desktop, through Citrix, they had app ID concept, right? So you can trace what you're using and all that stuff, and you can trace the usage and all that stuff, and they can, they can map that log to that application, to that user. So you need that. So I think he w he was talking about, I think that's what he's getting too. Like we have to, we have to sort of rethink how we write software in this new Microsoft, uh, sort of a paradigm, which I believe it, it's a beautiful thing. Uh, as long as we can manage it, because Microsoft is, are spread across like, um, small and a smaller piece of software is everywhere, right? So the state, how do we keep the state intact? How do we, um, sort of trace things? Uh, it becomes a huge problem if we don't do it right? So it it's, um, it's a little, this is some learning curve for most of the developers out there. So 60 dash 70% >>Rob was bringing this up, get into this whole crash. And what is it kind of breakdown? Because, you know, there's a point where you don't have the Nirvana of true horizontal scalability, where you might have microservices that need to traverse boundaries or systems, boundaries, where, or silos. So to Rob's point earlier, if you don't see it, you can't measure it or you can't get through it. How do you wire services across boundaries? Is that containers, is that, I mean, how does this all work? How do you guys see that working? I just see a train wreck there. >>It's, it's a really hard problem. And I don't think we should underestimate it because everything we toast talked about sounds great. If you're in a single AWS region, we're talking about distributed infrastructure, right? If you think about what we've been seeing, even more generally about, you know, edge sites, uh, colo on prem, you know, in cloud multi-region cloud, all these things are actually taking this one concept and you're like, Oh, I just want to store all the log data. Now, you're not going to store all your log data in one central location anymore. That in itself, as a distributed infrastructure problem, where I have to be able to troubleshoot what's going on, you know, and know that the logs are going to the right place and capture the data, that's really important. Um, and one of the innovations in this that I think is going to impact the industry over the next couple of years is the addition of more artificial intelligence and machine learning, into understanding operations patterns and practices. >>And I think that that's a really significant industry trend where Amazon has a distinct advantage because it's their systems and it's captive. They can analyze and collect a lot of data across very many customers and learn from those things and program systems that learn from those things. Um, and so the way you're going to keep up with this is not by logging more and more data, but by doing exactly what we're talking through, which was how do I analyze the patterns with machine learning so that I can get predictive analysis so that I can understand something that looks wrong and then put people on checking it before it goes wrong. >>All right, I gotta, I gotta bring up something controversial. I can't hold back any longer. Um, you know, Mark Zuckerberg said many, many years ago, all the old people, they can do startups, they're too old and you gotta be young and hungry. You gotta do that stuff. If we're talking systems theory, uh, automated meta reasoning, evolvable systems, resilience, distributed computing, isn't that us old guys that have actually have systems experience. I mean, if you're under the age of 30, you probably don't even know what a system is. Um, and, or co coded to the level of systems that we use to code. And I'm putting my quote old man kind of theory, only kidding, by the way on the 30. But my point is there is a generation of us that had done computer science in the, in the eighties and seventies, late seventies, maybe eighties and nineties, it's all it was, was systems. It was a systems world. Now, when you have a software world, the aperture is increasing in terms of software, are the younger generation of developers system thinkers, or have we lost that art, uh, or is it doesn't matter? What do you guys think? >>I, I think systems thinking comes with age. I mean, that's, that's sort of how I think, I mean, like I take the systems thinking a greater sort of, >>Um, world, like state as a system country, as a system and everything is a system, your body's a system family system, so it's the same way. And then what impacts the system when you operated internal things, which happened within the system and external, right. And we usually don't talk about the economics and geopolitics. There's a lot of the technology. Sometimes we do, like we have, I think we need to talk more about that, the data sovereignty and all that stuff. But, but even within the system, I think the younger people appreciate it less because they don't have the, they don't see, um, software taught like that in the universities. And, and, and, and by these micro micro universities now online trainings and stuff like sweaty, like, okay, you learn this thing and you're good at it saying, no, no, it's not like that. So you've got to understand the basics and how the systems operate. >>Uh, I'll give you an example. So like we were doing the, the, the client server in early nineties, and then gradually we moved more towards like having ESB enterprise services, bus where you pass a state, uh, from one object to another, and we can bring in the heterogeneous, uh, languages. This thing is written in Java. This is in.net. This is in Python. And then you can pass it through that. Uh, you're gonna make a state for, right. And that, that was contained environment. Like ESBs were contained environment. We were, I, I wrote software for ESPs myself at commerce one. And so like, we, what we need today is the ESP equallant in the cloud. We don't have that. >>Rob, is there a reverse ageism developers? I mean, if you're young, you might not have systems. What do you think? I, I don't agree with that. I actually think that the nature of the systems that we're programming forces people into more distributed infrastructure thinking the platforms we have today are much better than they were, you know, 20 years ago, 30 years ago, um, in the sense that I can do distributed infrastructure programming without thinking about it very much anymore, but you know, people know, they know how to use cloud. They know how to use a big platform. They know how to break things into microservices. I, I think that these are inherent skills that people need to think about that you're you're right. There is a challenge in that, you know, you get very used to the platform doing the work for you, and that you need to break through it, but that's an experiential thing, right? >>The more experienced developers are going to have to understand what the platforms do. Just like, you know, we used to have to understand how registers worked inside of a CPU, something I haven't worried about for a long, long time. So I, I don't think it's that big of a problem. Um, from, from that perspective, I do think that the thing that's really hard is collaboration. And so, you know, it's, it's hard people to people it's hard inside of a platform. It's hard when you're an Amazon size and you've been rolling out services all over the place and now have to figure out how to fit them all together. Um, and that to me is, is a design problem. And it's more about being patient and letting things, uh, mature. If anything might take away from this keynote is, you know, everybody asked Amazon to take a breath and work on usability and, and cross cross services synchronizations rather than, than adding more services into the mix. And that's, >>That's a good point. I mean, again, I bring up the conversation because it's kind of the elephant in the room and I make it being controversial to make a point there. So our view, because, you know, I interviewed Judy Estrin who helped found the internet with Vince Cerf. She's well-known for her contributions for the TCP IP protocol. Andy Besta Stein. Who's the, who's the Rembrandt of motherboards. But as Pat Gelsinger, CEO of VMware, I would say both said to me on the cube that without systems thinking, you don't understand consequences of when things change. And we start thinking about this microservices conversation, you start to hear a little bit of that pattern emerging, where those systems, uh, designs matter. And then you have, on the other hand, you have this modern application framework where serverless takes over. So, you know, Rob back to your infrastructure as code, it really isn't an either, or they're not mutually exclusive. You're going to have a set of nerds and geeks engineering systems to make them better and easier and scalable. And then you're going to have application developers that need to just make it work. So you start to see the formation of kind of the, I won't say swim lanes, but I mean, what do you guys think about that? Because you know, Judy and, um, Andy better sign up. They're kind of right. Uh, >>Th th the enemy here, and we're seeing this over and over again is complexity. And, and the challenge has been, and serverless is like, those people like, Oh, I don't have to worry about servers anymore because I'm dealing with serverless, which is not true. What you're doing is you're not worrying about infrastructure as much, but you, the complexity, especially in a serverless infrastructure where you're pulling, you know, events from all sorts of things, and you have one, one action, one piece of code, you know, triggering a whole bunch of other pieces of code in a decoupled way. We are, we are bringing so much complexity into these systems, um, that they're very hard to conceive of. Um, and AIML is not gonna not gonna address that. Um, I think one of the things that was wonderful about the setting, uh, in the sugar factory and at all of that, you know, sort of very mechanical viewpoint, you know, when you're actually connecting all things together, you can see it. A lot of what we've been building today is almost impossible to observe. And so the complexity price that we're paying in infrastructure is going up exponentially and we can't sustain infrastructures like that. We have to start leveling that in, right? >>Your point on the keynote, by the way, great call out on, on the, on the setting. I thought that was very clever. So what do you think about this? Because as enterprises go through this transformation, one of the big conversations is the solution architecture, the architecture of, um, how you lay all this out. It's complexity involved. Now you've got on premise system, you've got cloud, you've got edge, which you're hearing more and more local processing, disconnected systems, managing it at the edge with visualization. We're going to hear more about that, uh, with Dirk, when he comes on the queue, but you know, just in general as a practitioner out there, what, what's, what's your, what do you see people getting their arms around, around this, this keynote? What do they, what's your thoughts? >>Yeah, I, I think, uh, the, the pattern I see emerging is like, or in the whole industry, regardless, like if you put, when does your sign is that like, we will write less and less software in-house I believe that SAS will emerge. Uh, and it has to, I mean, that is the solution to kill the complexity. I believe, like we always talk about software all the time and we, we try to put this in the one band, like it's, everybody's dining, same kind of software, and they have, I'm going to complexity and they have the end years and all that stuff. That's not true. Right. If you are Facebook, you're writing totally different kind of software that needs to scale differently. You needs a lot of cash and all that stuff, right. Gash like this and cash. Well, I ain't both gases, but when you are a mid size enterprise out there in the middle, like fly over America, what, uh, my friend Wayne says, like, we need to think about those people too. >>Like, how do they drive software? What kind of software do they write? Like how many components they have in there? Like they have three tiers of four tiers. So I think they're a little more simpler software for internal use. We have to distinguish these applications. I always talk about this, like the systems of record systems of differentiation, the system of innovation. And I think cloud will do great. And the newer breed of applications, because you're doing a lot of, a lot of experimentation. You're doing a lot of DevOps. You have two pizza teams and all that stuff, which is good stuff we talk about, well, when you go to systems of record, you need stability. You need, you need some things which is operational. You don't want to touch it again, once it's in production. Right? And so the, in between that, that thing is, I think that's, that's where the complexity lies the systems are, which are in between those systems of record and system or innovation, which are very new Greenfield. That, that's what I think that's where we need to focus, uh, our, um, platform development, um, platform as a service development sort of, uh, dollars, if you will, as an industry, I think Amazon is doing that right. And, and Azura is doing that right to a certain extent too. I, I, I, I worry a little bit about, uh, uh, Google because they're more tilted towards the data science, uh, sort of side of things right now. >>Well, Microsoft has the most visibility into kind of the legacy world, but Rob, you're shaking your head there. Um, on his comment, >>You know, I, I, you know, I, I watched the complexity of all these systems and, and, you know, I'm not sure that sass suffocation of everything that we're doing is leading to less is pushing the complexity behind a curtain so that you, you, you can ignore the man behind the curtain. Um, but at the end of the day, you know what we're really driving towards. And I think Amazon is accelerating this. The cloud is accelerating. This is a new set of standard operating processes and procedures based on automation, based on API APIs, based on platforms, uh, that ultimately, I think people could own and could come back to how we want to operate it. When I look at what we w we were just shown with the keynote, you know, it was an, is things that application performance management and monitoring do. It's, it's not really Amazon specific stuff. There's no magic beans that Amazon is growing operational knowledge, you know, in Amazon, greenhouses that only they know how to consume. This is actually pretty block and tackle stuff. Yeah. And most people don't need to operate it at that type of scale to be successful. >>It's a great point. I mean, let's, let's pick up on that for the last couple of minutes we have left. Cause I think that's a great, great double-down because you're thinking about the mantra, Hey, everything is a service, you know, that's great for business model. You know, you hand it over to the techies. They go, wait a minute. What does that actually mean? It's harder. But when I talk to people out there and you hear people talking about everything is a service or sanctification, I do agree. I think you're putting complexity behind the curtain, but it's kind of the depends answer. So if you're going to have everything as a service, the common thesis is it has to have support automation everywhere. You got to automate things to make things sassiphy specified, which means you need five nines, like factory type environments. They're not true factories, but Rob, to your point, if you're going to make something a SAS, it better be Bulletproof. Because if you're, if you're automating something, it better be automated, right? You can measure things all you want, but if it's not automated, like a, like a, >>And you have no idea what's going on behind the curtains with some of these, these things, right. Especially, you know, I know our business and you know, our customers' businesses, they're, they're reliant on more and more services and you have no idea, you know, the persistence that service, if they're going to break an API, if they're going to change things, a lot of the stuff that Amazon is adding here defensively is because they're constantly changing the wheels on the bus. Um, and that is not bad operational practice. You should be resilient to that. You should have processes that are able to be constantly updated and CICB pipelines and, you know, continuous deployments, you shouldn't expect to, to, you know, fossilize your it environment in Amber, and then hope it doesn't have to change for 10 years. But at the same time, we'll work control your house. >>That's angle about better dev ops hypothetical, like a factory, almost metaphor. Do you care if the cars are being shipped down the assembly line and the output works and the output, if you have self-healing and you have these kinds of mechanisms, you know, you could have do care. The services are being terminated and stood up and reformed as long as the factory works. Right? So again, it's a complexity level of how much it, or you want to bite off and chew or make work. So to me, if it's automated, it's simple, did it work or not? And then the cost of work to be, what's your, what's your angle on this? Yeah. >>I believe if you believe in systems thinking, right. You have to believe in, um, um, the concept of, um, um, Oh gosh, I'm losing over minor. Um, abstraction. Right? So abstraction is your friend in software. Abstraction is your friend anyways, right? That's how we, humans pieces actually make a lot more progress than any other sort of living things here in this world. So that's why we are smart. We can abstract complexity behind the curtains, right? We, we can, we can keep improving, like from the, the, you know, wooden cart to the car, to the, to the plane, to the other, like, we, we, we have this, like when, when we see we are flying these airplanes, like 90% of the time they're on autopilot, like that's >>Hi, hiding my attractions is, is about evolution. Evolvable software term. He said, it's true. All right, guys, we have one minute left. Um, let's close this out real quick. Each of you give a closing statement on what you thought of the keynote and Verner's talk prop, we'll start with you. >>Uh, you know, as always, it's a perf keynote, uh, very different this year because it was so operationally focused and using the platform and, and helping people run their, their, off their applications and software better. And I think it's an interesting turn that we've been waiting for for Amazon, uh, to look at, you know, helping people use their own platform more. Um, so, uh, refreshing change and I think really powerful and well delivered. I really did like the setting >>Great shopping. And when we found, I found out today, that's Teresa Carlson is now running training and certification. So I'm expecting that to be highly awesomely accelerated a success there. Sorry, what's your take real quick on burners talk, walk away. Keynote thoughts. >>I, I, I think it was what I expected it to be like, he focused on the more like a software architecture kind of discussion. And he focused this time a little more on the ops side and the dev side, which I think they, they are pivoting a little bit, um, because they, they want to sell more AWS stuff to us, uh, to the existing enterprises. So I think, um, that was, um, good. Uh, I wish at the end, he said, not only like, go, go build, but also go build and operate. So can, you know, they all say, go build, build, build, but like, who's going to operate this stuff. Right. So I think, um, uh, I will see a little shift, I think, going forward, but we were talking earlier, uh, during or watch party that I think, uh, going forward, uh, AWS will open start open sourcing the commoditized version of their cloud, which have been commoditized by other vendors and gradually they will open source it so they can keep the hold onto the enterprises. I think that's what my take is. That's my prediction is >>Awesome and want, I'll make sure I'm at your watch party next time. Sorry. I missed it. Nobody's taking notes. Try and prepare. Sorry, Rob. Thanks for coming on and sharing awesome insight and expertise to experts in cloud and dev ops. I know them. And can firstly vouch for their awesomeness? Thanks for coming on. I think Verner can verify what I thought already was reporting Amazon everywhere. And if you connect the dots, this idea of reasoning, are we going to have smarter cloud? That's the next conversation? I'm John for your host of the cube here, trying to get smarter with Aus coverage. Thanks to Robin. Sarvi becoming on. Thanks for watching.

>>from around the globe. It's the Cube with digital coverage of AWS reinvent 2020 sponsored by Intel, AWS and our community partners. >>Hello and welcome back to the cubes Virtual coverage of AWS reinvent 2020. Um, John for your host with a cube virtual were not there in person, but we're gonna do it our job with the best remote we possibly can. Where? Wall to wall coverage on the AWS reinvent site as well as on demand on the Cube. Three new 3 65 platform. We got some great power panel analysts here to dig in and discuss Partner Day for a W S what it means for the customer. What it means for the enterprise, the buyer, the people trying to figure out who to buy from and possibly new partners. How can they re engineer and reinvent their company to partner better with Amazon, take advantage of the benefits, but ultimately get more sales? We got Tim Crawford, star Beat Joel and Day Volonte, Friends of the Cube. We all know him on Twitter, You guys, the posse, the Cube policy. Thanks for coming on. I'm sure it's good guys entertaining and we're >>hanging out drinking beer. Oh, my God. That'd be awesome. You guys. >>Great to have you on. I wanted to bring you on because it's unique. Cross section of perspectives. And this isn't This is from the end user perspective. And, Tim, you've been talking about the c x o s for years. You expert in this? Sorry. You're taking more from a cloud perspective. You've seen the under the hood. What's happening? Let's all put it together. If your partner Okay, first question to the group. I'm a partner. Do I win with Amazon, or do I lose with Amazon? First question. >>Yeah, I'll jump in. I'll say, you know, regardless you win, you win with Amazon. I think there's a lot of opportunity for partners with Amazon. Um, you have to pick your battles, though. You have to find the right places where you can carve out a space that isn't too congested but also isn't really kind of fettered with a number of incumbents. And so if you're looking at the enterprise space, I think that there is a ton of potential because, let's face it, >>Amazon >>doesn't have all of the services packaged in a way that the enterprise can consume. And I think that leaves a lot of fertile ground for s eyes and I SVS to jump in and be able to connect those dots so I'd say it's win, win >>start be if you're like a so cohesively onstage. Jackson's coming out talking about China, the chips and data. If you're like a vendor and I s V you're a startup or your company trying to reinvent How do you see Amazon as a partner? >>Yeah, I see Amazon as a big market for me. You know, it increased my sort of tam, if you will. Uh, the one big sort off trend is that the lines between technology providers and service providers are blurred. Actually, it's flipping. I believe it will flip at some time. We will put consume technology from service providers, and they are becoming technology providers. Actually, they're not just being pipe and power kind of cloud. They are purely software, very high sort of highly constructed machinery, if you will. Behind the scenes with software. >>That's >>what Amazon is, uh, big machine. If you are, and you can leverage that and then you can help your customers achieve their business called as a partner. I think's the women and the roll off. Actually, Assize is changing, I believe a size. Well, I thought they were getting slow, sidetracked by the service providers. But now they have to actually change their old the way they they used to get these, you know, shrink wrap software, and then install and configure and all that stuff. Now it's in a cloud >>on >>they have to focus a little more on services, and and some of the s eyes are building tools for multi cloud consumption and all that. So things are changing under under this whole big shift to go out. >>I mean, I think if you're in S I and you're lifting and shifting, you make a few bucks and helping people do that deal with the tech. But I think we're the rial. Money is the business transformation, and you find the technology is there, it's it's another tool in the bag. But if you can change your operating model, that's gonna drive telephone numbers to the bottom line. That's a boardroom discussion, and that's where the real dollars are for s eyes. That's like that's why guys like Accent you're leading leading into the cloud Big time >>e think I think you're absolutely right, David. I think that's that's one aspect that we have to kind of call out is you can be one of those partners that is focused on the transaction and you'll be successful doing that. But you're absolutely right. If you focus on the long game. I think that is just like I said, completely fertile ground. And there are a lot of opportunities because historically Amazon was ah was a Lego parts, uh, type of cloud provider, right? They provided you with the basic building blocks, which is great for Web scale and startups not so good for enterprise. And so now Amazon is starting to put together in package part, so it's more consumable by enterprises. But you still need that help. And as Sarpy just mentioned, you also have to consider that Amazon is not the only aspect that you're gonna be using. You're gonna be using other providers to. And so I think this again is where partners they pick a primary, and then they also bring in the others where appropriate. >>All right, I want to get into this whole riff. I have a cherry chin on day one. Hey, came on the special fireside chat with me and we talked about, um, cloud errors before cloud Amazon. And now I'll call postcode because we're seeing this kind of whole new, you know, in the cloud kind of generation. And so he said, OK, this pre cloud you had Amazon generation, whereas lift and shift. Ah, lot of hybrid And you have everything is in the cloud like a snowflake kind of thing. And he kind of call it the reptiles versus the amphibians you're on. See your inland, your hybrid, and then you're you're in the water. I mean, so So he kind of went on, Took that another level, meaning that. Okay, this is always gonna be hybrid. But there's a unique differentiation for being all in the cloud. You're seeing different patterns. Amazon certainly has an advantage. See, Dev Ops guru, that's just mining the data of their entire platform and saying Okay, Yeah, do this. There's advantages for being in the cloud that aren't available. Hybrid. So amphibian on land and sea hybrid. And then in the cloud. How do you guys see that if you're a partner. You wanna be on the new generation. What's the opportunity to capture value? He has hybrid certainly coexist. But in the new era, >>remember Scott McNealy used to talk about car makers and car dealers. And of course, Sun's gone. But he used to say, We want to be a carmaker. Car dealers. They got big houses and big boats, but we're gonna be a carmaker. Oh, I think it's some similarities here. I mean, there's a lot of money to be made as a as a car dealer. But you see, companies like Dell, H P E. You know, they want to be carmakers. Obviously Google Microsoft. But there are gonna be a lot of successful really big carmakers in this game. >>Yeah, I believe I believe I always call it Amazon Is the makers cloud right, So they are very developer friendly. They were very developer friendly for startups. Uh, a stem said earlier, but now they are very developer, friendly and operations friendly. Now, actually, in a way for enterprises, I believe, and that the that well, the jerry tend to sort of Are you all all in cloud are sitting just in the dry land. Right now, I think every sort off organization is in a different sort off mature, at different maturity level. But I think we're going all going towards a technology consumption as a service. Mostly, I think it will be off Prem. It can be on Prem in future because off age and all that. And on that note, I think EJ will be dominated by Tier one cloud providers like crazy people who think edge will be nominally but telcos and all that. I think they're just, uh, if >>I made Thio, if I may interject for a second for the folks watching, that might not be old enough to know who Scott McNealy is. He's the founder of Sun Microsystems, which was bought by Oracle years ago. Yeah, basically, because many computer, there's a lot of young kids out there that even though Scott McNealy's But remember, >>do your homework, Scott, you have to know who Scott Scott McNealy >>also said, because Bill Gates was dominant. Microsoft owns the tires and the gas to, and they want to own the road. So remember Microsoft was dominating at that time. So, Tim Gas data is that I mean, Amazon might have everything there. >>I was gonna go back to the to the comment. You know, McNeely came out with some really, really good analogies over his tenure. Um, it's son and you know, son had some great successes. But unfortunately, Cloud is not as simplistic as buying a car and having the dealership and the ecosystem of gas and tires. And the rest you have to think about the toll journey. And that journey is incredibly complicated, especially for the enterprise that's coming from legacy footprints, monolithic application stacks and trying to understand how to make that transition. It's almost it's almost, in a way mawr analogous to your used to riding a bike, and now you're gonna operate a semi. And so how do you start to put all of the pieces into place to be able to make that transition? And it's not trivial. You have to figure out how your culture changes, how your processes changes. There are a lot of connected parts. It's not a simple as the ecosystem of tires and gas. We have to think about how that data stream fits in with other data streams where analytics are gonna be done. What about tying back to that system of record that is going to stay on the legacy platform. Oh, and by the way, some of that has to still stay on Prem. It can't move to the cloud yet. So we have this really complicated, diverse environment that we have to manage, and it's only getting more complicated. And I think that's where the opportunity comes in for the size and s visas. Step into that. Understand that journey, understand the transitions. I don't believe that enterprises, at least in the near term, let alone short term, will be all in cloud. I think that that's more of a fantasy than reality. There is a hybrid state that that is going to be transitory for some period of time, and that's where the big opportunity is. >>I think you're right on time. I think just to double down on that point, just to bring that to another level is Dave. Remember back in the days when PCs where the boom many computers with most clients there was just getting started? There was a whole hype cycle on hard drives, right? Hard drives were the thing. Now, if you look out today, there's more. Observe, ability, startups and I could count, right? So to Tim's point, this monolithic breakdown and component izing decomposing, monolithic APs or environments with micro services is complex. So, to me, the thing that I see is that that I could relate to is when I was breaking in in the eighties, you had the mainframes. Is being the youngun I'm like, Okay, mainframes, old monolithic client server is a different paradigm thing. You had, uh, PCs and Internet working. I think all that change is happening so fast right now. It's not like over 10 years to Tim's points, like mainframes to iPhones. It's happening in like three years. Imagine crunching all that complexity and change down to a short window. I think Amazon has kind of brought that. I'm just riffing on that, But >>yeah, you're absolutely right, John. But I think there's another piece and we can use a very specific example to show this. But another piece that we have to look at is we're trying to simplify that environment, and so a good place to simplify that is when we look at server lis and specifically around databases, you know, historically, I had to pick the database architecture that the applications would ride on. Then I have to have the infrastructure underneath and manage that appropriately so that I have both the performance a swell, a security as well as architecture. Er and I have to scale that as needed. Today, you can get databases of service and not have to worry about the underpinnings. You just worry about the applications and how those data streams connect to other data streams. And so that's the direction that I think things were going is, and we see this across the enterprise we're looking for. Those packaged package might be a generalized term, but we're looking for um, or packaged scenario and opportunity for enterprises rather than just the most basic building blocks. We have to start putting together the preformed applications and then use those as larger chunks. And >>this is the opportunity for a size I was talking before about business transformation. If you take, take Tim's database example, you don't need somebody anymore. Toe, you know, set up your database to tune it. I mean, that's becoming autonomous. But if you think about the way data pipelines work in the way organizations are structured where everything because it goes into this monolithic data lake or and and And it's like generic content coming in generic data where the business owner has to get in line and beg a data scientist or quality engineered or thio ingest a new data source. And it's just like the old data warehouse days where I think there's tremendous opportunities for s eyes to go in a completely re architect. The data model. Sergeant, This is something you and I were talking about on Twitter. It's That's why I like what snowflakes doing. It's kind of a AWS is trying to do with lasted glue views, but there's a whole business transformation opportunity for s eyes, which I just think is huge. Number l >>e all talk. Go ahead. Sorry. Yeah, >>I think we >>all talk, but we know we all agree on one thing that the future is hybrid for at least for next. You know, 10 years, if not more. Uh, hybrid is hard. The data proximity is, uh, very important. That means Leighton see between different workloads, right? That's super important. And I talk about this all the time and almost in every conversation I have about about. It's just scenario, is that there three types of applications every every enterprise systems or fractured systems, systems of engagement and the systems of innovation and my theory of cloud consumption tells me that sooner or later, systems off record. We'll move into SAS SAS world. That's that's how I see it. There's no other way around, I believe, and the systems off engagement or systems off differentiation something and call it. They will leverage a lot off platforms, the service and in that context context, I have said it many times the to be a best of the breed platform. As a service, you have to be best off the breed, um, infrastructure as a service provider. And that's Amazon. And that is that's also a zero to a certain extent, and then and and Google is trying to do that, too. So the feature sort off gap between number one cloud and two and three is pretty huge. I believe I think Amazon is doing great data democratization through several less. I just love serving less for that Several things over. Unless there is >>a winning formula is no doubt about several times I totally agree. But I think one of the things that I miss it has done is they've taken server lists. They brought their putting all the I as and the chips, and they're moving all the value up to the service layer, which gives them the advantage over others. Because everyone else is trying to compete down here. They're gonna be purpose built. If you look what Apple is doing with the chips and what the Amazon is doing, they're gonna kind of have this chip to chip scenario and then the middle. Where in between is the container ization, the micro services and Lambda? So if you're a developer, you approach is it's programmable at that point that could that could be a lock spec. I think for Amazon, >>it absolutely could be John. But I think there's another aspect here that we have to touch on, especially as we think about partners and where the opportunities come in. And that is that We often talk about non cloud to cloud right, how to get from on Prem to cloud. But the piece that you also have thio bring into the conversation is Theo edge to cloud continuum and So I think if you start to look at some of the announcements this week from AWS, you start looking at some of the new instance types uh, that are very ai focused. You look at the two new form factors for outposts, which allows you to bring cloud to a smaller footprint within an on premise premises, situation, uh, different local zones. And then Thea other piece that I think is really interesting is is their announcements around PCs and eks anywhere being able to take cloud in kubernetes, you know, across the board. And so the challenge here is, as I mentioned earlier, complexity is paramount. It's concern for enterprises just moving to cloud. You start layering in the edge to cloud continuum, and it just it gets exponentially more complicated. And so Amazon is not going to be the one to help you go through that. Not because they can't, but frankly, just the scale of help that is going to be needed amongst enterprises is just not there. And so this is really where I think the opportunity lies for the s eyes and I SVS and partners. You >>heard how Jassy defined hybrid John in the article that you wrote when you did your one on one with him, Tim and the in the analyst call, you answered my question and then I want to bring in Antonio near his comment. But Jassy basically said, Look, we see the cloud bring We're gonna bring a W s to the edge and we see data centers. This is another edge node and San Antonio Neary after HP is pretty good quarter uh came out and said, Well, we heard the public cloud provider talking about hybrid welcome, you know? >>Yeah, they were going and then getting here jumped on that big time. But we'll be looking hybrid. Tim nailed The complexity is the is the evil is friction is a friction area. If the complexity could be mastered by the edge provider closest to the customer, that's gonna be valuable, um, for partners. And then we can do that. Amazon's gonna have to continue to remove the friction and putting that together, which is why I'm nervous about their channel partners. Because if I'm a partner, I asked myself, How do I make money with Amazon? Right? At the end of the day, it's money making right. So how can I be successful? Um, not gonna sell more in the marketplace. Will the customer consumer through there? Is it friction or is a complex So this notion of complexity and friction becomes a double edged sword Tim on both sides. So we have five minutes left. Let's talk about the bottom side Complexity, >>friction. So you're absolutely right, John. And you know, the other thing that that I would say is for the partner, you have to look beyond what Amazon is selling today. Look at where the customers are going. And you know, David, I think you and I were both in an analyst session with Andy Jassy several years ago where one of the analysts asked the question. So you know, what's your perspective on Hybrid Cloud? In his response, candidly was, while we have this particular service and really, what he was talking to is a service that helps you on board to Amazon's public cloud. There was there was not an acknowledgment of hybrid cloud at the time, But look at how things have changed just in a short few years, and I understand where Jassy is coming from, but this is just exemplifies the fact that if you're a partner, you have to look beyond what Amazon is saying and think toe how the customer is evolving, how the enterprise is evolving and get yourself ahead of them. That will position you best for both today. And as you're building for the future. >>That's a great point, Dave. Complexity on buying. I'm a customer. You can throw me a marketplace all you want, but if I'm not gonna be tied into my procurement, how I'm consuming technology. Tim's point. Amazon isn't the only game in town. I got other suppliers. >>Yeah, well, certainly for some technology suppliers, they're basically could bring their on prem estate if it's big enough into the cloud. Uh, you know what is big enough? That's the big question here. You know, our guys like your red hats big enough. Okay, we know that Nutanix pure. They're sort of the next layer down. Can they do? They have enough of a customer base that they could bring into the cloud, create that abstraction layer, and then you got the born in the cloud guy Snowflake, Colombia or two good examples. Eso They've got the technology partners and then they're the size and consultants. And again, I see that is the really big opportunity is 10 points out? Amazon is acknowledging that hybrid Israel in in a newly defined way, they're going out to the edge, find you wanna call data center the edge. How are they going to support those installations? How are they gonna make sure that they're running properly? That they're connected to the business process? Those air That's s I whitespace. Huge. >>Guys, we have to wrap it up right now. But I just end on, you know, we'll get everyone go A little lightning around quick soundbite on the phrase with him, which stands for what's in it from me. So if I'm a partner, I'm a customer. I look at Amazon, I think. What's in it for me? Yeah. What a za customer like what do I get out of this? >>Yeah, having done, like more than 100 data center audits, and I'm seeing what mess up messes out there and having done quite a few migrations to cloud migrations of the messy messages piece, right? And it doesn't matter if you're migrating 10% or 20 or 30 it doesn't matter that how much you're migrating? It's a messy piece, and you cannot do with our partners that work. Actually, you need that. Know how you need to infuse that that education into into your organization, how to consume cloud, how toe make sense of it, how you change your processes and how you train your people. So it touches all the products, people and processes. So on three years, you gotta have partners on your side to make it >>so Hey, I'll go quick. And, Tim, you give you the last word. Complexity is cash. Chaos is cash. Follow the complexity. You'll make cash. >>Yeah, you said it, David. I think anyway, that you can help an enterprise simplify. And if you're the enterprise, if you're the customer, look for those partners. They're gonna help you simplify the journey over time. That's where the opportunity really lies. >>Okay, guys, Expert power panel here on Cuba live program, part of AWS reinvent virtual coverage, bringing you all the analysis from the experts. Digital transformations here. What's in it for me is a partner and customer. Help me make some money, master complexity and serve my customer. Mister Cube. Thanks for watching >>que Yeah, from around the globe. It's the cute

(lively classical music) >> Hello everyone, welcome to this special Cube conversation, we are here at the Power Panel Conversation. I'm John Furrier, in Palo Alto, California, theCUBE studies we have remote on the line here, talk about the cloud technology's impact on entrepreneurship and startups and overall ecosystem is Jim Long, who's the CEO of Didja, which is a startup around disrupting digital TV, also has been an investor and a serial entrepreneur, Sarbjeet Johal, who's the in-cloud influencer of strategy and investor out of Berkeley, California, The Batchery, and also Joseph Jacks, CUBE alumni, actually you guys are all CUBE alumni, so great to have you on. Joseph Jacks is the founder and general partner of OSS Capital, Open Source Software Capital, a new fund that's been raised specifically to commercialize and fund startups around open source software. Guys, we got a great panel here of experts, thanks for joining us, appreciate it. >> Go Bears! >> Nice to be here. >> So we have a distinguished panel, it's the Power Panel, we're on cloud technos, first I'd like to get you guys' reaction you know, you're to seeing a lot of negative news around what Facebook has become, essentially their own hyper-scale cloud with their application. They were called the digital, you know, renegades, or digital gangsters in the UK by the Parliament, which was built on open source software. Amazon's continuing to win, Azure's doing their thing, bundling Office 365, making it look like they've got more revenue with their catching up, Google, and then you got IBM and Oracle, and then you got an ecosystem that's impacted by this large scale, so I want to get your thoughts on first point here. Is there room for more clouds? There's a big buzzword around multiple clouds. Are we going to see specialty clouds? 'Causes Salesforce is a cloud, so is there room for more cloud? Jim, why don't you start? >> Well, I sure hope so. You know, the internet has unfortunately become sort of the internet of monopolies, and that doesn't do anyone any good. In fact, you bring up an interesting point, it'd be kind of interesting to see if Facebook created a social cloud for certain types of applications to use. I've no idea whether that makes any sense, but Amazon's clearly been the big gorilla now, and done an amazing job, we love using them, but we also love seeing, trying out different services that they have and then figuring out whether we want to develop them ourselves or use a specialty service, and I think that's going to be interesting, particularly in the AI area, stuff like that. So I sure hope more clouds are around for all of us to take advantage of. >> Joseph, I want you to weigh in here, 'cause you were close to the Kubernetes trend, in fact we were at a OpenStack event when you started Kismatic, which is the movement that became KubeCon Cloud Native, many many years ago, now you're investing in open source. The world's built on open source, there's got to be room for more clouds. Your thoughts on the opportunities? >> Yeah, thanks for having me on, John. I think we need a new kind of open collaborative cloud, and to date, we haven't really seen any of the existing major sort of large critical mass cloud providers participate in that type of model. Arguably, Google has probably participated and contributed the most in the open source ecosystem, contributing TensorFlow and Kubernetes and Go, lots of different open source projects, but they're ultimately focused on gravitating huge amounts of compute and storage cycles to their cloud platform. So I think one of the big missing links in the industry is, as we continue to see the rise of these large vertically integrated proprietary control planes for computing and storage and applications and services, I think as the open source community and the open source ecosystem continues to grow and explode, we'll need a third sort of provider, one that isn't based on monopoly or based on a traditional proprietary software business like Microsoft kind of transitioning their enterprise customers to services, sort of Amazon in the first camp vertically integrated many a buffet of all these different compute, storage, networking services, application, middleware. Microsoft focused on sort of building managed services of their software portfolio. I think we need a third model where we have sort of an open set of interfaces and an open standards based cloud provider that might be a pure software company, it might be a company that builds on the rails and the infrastructure that Amazon has laid down, spending tens of billions in cap ex, or it could be something based on a project like Kubernetes or built from the community ecosystem. So I think we need something like that just to sort of provide, speed the innovation, and disaggregate the services away from a monolithic kind of closed vendor like Amazon or Azure. >> I want to come back to that whole startup opportunity, but I want to get Sarbjeet in here, because we've been in the B2B area with just last week at IBM Think 2019. Obviously they're trying to get back into the cloud game, but this digital transformation that has been the cliche for almost a couple of years now, if not five or plus. Business has got to move to the cloud, so there's a whole new ball game of complete cultural shift. They need stability. So I want to talk more about this open cloud, which I love that conversation, but give me the blocking and tackling capabilities first, 'cause I got to get out of that old cap ex model, move to an operating model, transform my business, whether it's multi clouds. So Sarbjeet, what's your take on the cloud market for say, the enterprise? >> Yeah, I think for the enterprise... you're just sitting in that data center and moving those to cloud, it's a cumbersome task. For that to work, they actually don't need all the bells and whistles which Amazon has in the periphery, if you will. They need just core things like compute, network, and storage, and some other sort of services, maybe database, maybe data share and stuff like that, but they just want to move those applications as is to start with, with some replatforming and with some changes. Like, they won't make changes to first when they start moving those applications, but our minds are polluted by this thinking. When we see a Facebook being formed by a couple of people, or a company of six people sold for a billion dollars, it just messes up with our mind on the enterprise side, hey we can do that too, we can move that fast and so forth, but it's sort of tragic that we think that way. Well, having said that, and I think we have talked about this in the past. If you are doing anything in the way of systems innovation, if your building those at, even at the enterprise, I think cloud is the way to go. To your original question, if there's room for newer cloud players, I think there is, provided that we can detach the platforms from the environments they are sitting on. So the proprietariness has to kinda, it has to be lowered, the degree of proprietariness has to be lower. It can be through open source I think mainly, it can be from open technologies, they don't have to be open source, but portable. >> JJ was mentioning that, I think that's a big point. Jim Long, you're an entrepreneur, you've been a VC, you know all the VCs, been around for a while, you're also, you're an entrepreneur, you're a serial entrepreneur, starting out at Cal Berkeley back in the day. You know, small ideas can move fast, and you're building on Amazon, and you've got a media kind of thing going on, there's a cloud opportunity for you, 'cause you are cloud native, 'cause you're built in the cloud. How do you see it playing out? 'Cause you're scaling with Amazon. >> Well, so we obviously, as a new startup, don't have the issues the enterprise folks have, and I could really see the enterprise customers, what we used to call the Fortune 500, for example, getting together and insisting on at least a base set of APIs that Amazon and Microsoft et cetera adopt, and for a startup, it's really about moving fast with your own solution that solves a problem. So you don't necessarily care too much that you're tied into Amazon completely because you know that if you need to, you can make a change some day. But they do such a good job for us, and their costs, while they can certainly be lower, and we certainly would like more volume discounts, they're pretty darn amazing across the network, across the internet, we do try to price out other folks just for the heck of it, been doing that recently with CDNs, for example. But for us, we're actually creating a hybrid cloud, if you will, a purpose-built cloud to support local television stations, and we do think that's going to be, along with using Amazon, a unique cloud with our own APIs that we will hopefully have lots of different TV apps use our hybrid cloud for part of their application to service local TV. So it's kind of a interesting play for us, the B2B part of it, we're hoping to be pretty successful as well, and we hope to maybe have multiple cloud vendors in our mix, you know. Not that our users will know who's behind us, maybe Amazon, for something, Limelight for another, or whatever, for example. >> Well you got to be concerned about lock-in as you become in the cloud, that's something that everybody's worried about. JJ, I want to get back to you on the investment thesis, because you have a cutting edge business model around investing in open source software, and there's two schools of thought in the open source community, you know, free contribution's great, and let tha.t be organic, and then there's now commercialization. There's real value being created in open source. You had put together a chart with your team about the billions of dollars in exits from open source companies. So what are you investing in, what do you see as opportunities for entrepreneurs like Jim and others that are out there looking at scaling their business? How do you look at success, what's your advice, what do you see as leading indicators? >> I think I'll broadly answer your question with a model that we've been thinking a lot about. We're going to start writing publicly about it and probably eventually maybe publish a book or two on it, and it's around the sort of fundamental perspective of creating value and capturing value. So if you model a famous investor and entrepreneur in Silicon Valley who has commonly modeled these things using two different letter variables, X and Y, but I'll give you the sort of perspective of modeling value creation and value capture around open source, as compared to closed source or proprietary software. So if you look at value creation modeled as X, and value capture modeled as Y, where X and Y are two independent variables with a fully proprietary software company based approach, whether you're building a cloud service or a proprietary software product or whatever, just a software company, your value creation exponent is typically bounded by two things. Capital and fundraising into the entity creating the software, and the centralization of research and development, meaning engineering output for producing the software. And so those two things are tightly coupled to and bounded to the company. With commercial open source software, the exact opposite is true. So value creation is decoupled and independent from funding, and value creation is also decentralized in terms of the research and development aspect. So you have a sort of decentralized, community-based, crowd-sourced, or sort of internet, global phenomena of contributing to a code base that isn't necessarily owned or fully controlled by a single entity, and those two properties are sort of decoupled from funding and decentralized R and D, are fundamentally changing the value creation kind of exponent. Now let's look at the value capture variable. With proprietary software company, or proprietary technology company, you're primarily looking at two constituents capturing value, people who pay for accessing the service or the software, and people who create the software. And so those two constituents capture all the value, they capture, you know, the vendor selling the software captures maybe 10 or 20% of the value, and the rest of the value, I would would express it say as the customer is capturing the rest of the value. Most economists don't express value capture as capturable by an end user or a customer. I think that's a mistake. >> Jim, you're-- >> So now... >> Okay, Jim, your reaction to that, because there's an article went around this weekend from Motherboard. "The internet was built on free labor "of open source developers. "Is that sustainable?" So Jim, what's your reaction to JJ's comments about the interactions and the dynamic between value creation, value capture, free versus sustainable funding? >> Well if you can sort of mix both together, that's what I would like, I haven't really ever figured out how to make open source work in our business model, but I haven't really tried that hard. It's an intriguing concept for sure, particularly if we come up with APIs that are specific to say, local television or something like that, and maybe some special processes that do things that are of interest to the wider community. So it's something I do plan to look at because I do agree that if you, I mean we use open source, we use this thing called FFmpeg, and several other things, and we're really happy that there's people out there adding value to them, et cetera, and we have our own versions, et cetera, so we'd like to contribute to the community if we could figure out how. >> Sarbjeet, your reactions to JJ's thesis there? >> I think two things. I will comment on two different aspects. One is the lack of standards, and then open source becoming the standard, right. I think open source kind of projects take birth and life in its own, because we have lack of standard, 'cause these different vendors can't agree on standards. So remember we used to have service-oriented architecture, we have Microsoft pushing some standards from one side and IBM pushing from other, SOAP versus xCBL and XML, different sort of paradigms, right, but then REST API became the de facto standard, right, it just took over, I think what REST has done for software in last about 10 years or so, nothing has done that for us. >> well Kubernetes is right now looking pretty good. So if you look at JJ, Kubernetes, the movement you were really were pioneering on, it's having similar dynamic, I mean Kubernetes is becoming a forcing function for solidarity in the community of cloud native, as well as an actual interoperable orchestration layer for multiple clouds and other services. So JJ, your thoughts on how open source continues as some of these new technologies, like Kubernetes, continue to hit the scene. Is there any trajectory change in open source that you see, that you could share, I'd love to get your insights on what's next behind, you know, the rise of Kubernetes is happening, what's next? >> I think more abstractly from Kubernetes, we believe that if you just look at the rate of innovation as a primary factor for progress and forward change in the world, open source software has the highest rate of innovation of any technology creation phenomena, and as a consequence, we're seeing more standards emerge from the open source ecosystem, we're seeing more disruption happen from the open source ecosystem, we're seeing more new technology companies and new paradigms and shifts happen from the open source ecosystem, and kind of all progress across the largest, most difficult sort of compound, sensitive problems, influenced and kind of sourced from the open source ecosystem and the open source world overall. Whether it's chip design, machine learning or computing innovations or new types of architectures, or new types of developer paradigms, you know, biological breakthroughs, there's kind of things up and down the technology spectrum that have a lot to sort of thank open source for. We think that the future of technology and the future of software is really that open source is at the core, as opposed to the periphery or the edges, and so today, every software technology company, and cloud providers included, have closed proprietary cores, meaning that where the core is, the data path, the runtime, the core business logic of the company, today that core is proprietary software or closed source software, and yet what is also true, is at the edges, the wrappers, the sort of crust, the periphery of every technology company, we have lots of open source, we have client libraries and bindings and languages and integrations, configuration, UIs and so on, but the cores are proprietary. We think the following will happen over the next few decades. We think the future will gradually shift from closed proprietary cores to open cores, where instead of a proprietary core, an open core is where you have core open source software project, as the fundamental building block for the company. So for example, Hadoop caused the creation of MapR and Cloudera and Hortonworks, Spark caused the creation of Databricks, Kafka caused the creation of Confluent, Git caused the creation of GitHub and GitLab, and this type of commercial open source software model, where there's a core open source project as the kernel building block for the company, and then an extension of intellectual property or wrappers around that open source project, where you can derive value capture and charge for licensed product with the company, and impress customer, we think that model is where the future is headed, and this includes cloud providers, basically selling proprietary services that could be based on a mixture of open source projects, but perhaps not fundamentally on a core open source project. Now we think generally, like abstractly, with maybe somewhat of a reductionist explanation there, but that open core future is very likely, fundamentally because of the rate of innovation being the highest with the open source model in general. >> All right, that's great stuff. Jim, you're a historian of tech, you've lived it. Your thoughts on some of the emerging trends around cloud, because you're disrupting linear TV with Didja, in a new way using cloud technology. How do you see cloud evolving? >> Well, I think the long lines we discussed, certainly I think that's a really interesting model, and having the open source be the center of the universe, then figure out how to have maybe some proprietary stuff, if I can use that word, around it, that other people can take advantage of, but maybe you get the value capture and build a business on that, that makes a lot of sense, and could certainly fit in the TV industry if you will from where I sit... Bring services to businesses and consumers, so it's not like there's some reason it wouldn't work, you know, it's bound to, it's bound to figure out a way, and if you can get a whole mass of people around the world working on the core technology and if it is sort of unique to what mission of, or at least the marketplace you're going after, that could be pretty interesting, and that would be great to see a lot of different new mini-clouds, if you will, develop around that stuff would be pretty cool. >> Sarbjeet, I want you to talk about scale, because you also have experience working with Rackspace. Rackspace was early on, they were trying to build the cloud, and OpenStack came out of that, and guess what, the world was moving so fast, Amazon was a bullet train just flying down the tracks, and it just felt like Rackspace and their cloud, you know OpenStack, just couldn't keep up. So is scale an issue, and how do people compete against scale in your mind? >> I think scale is an issue, and software chops is an issue, so there's some patterns, right? So one pattern is that we tend to see that open source is now not very good at the application side. You will hardly see any applications being built as open source. And also on the extreme side, open source is pretty sort of lame if you will, at very core of the things, like OpenStack failed for that reason, right? But it's pretty good in the middle as Joseph said, right? So building pipes, building some platforms based on open source, so the hooks, integration, is pretty good there, actually. I think that pattern will continue. Hopefully it will go deeper into the core, which we want to see. The other pattern is I think the software chops, like one vendor has to lead the project for certain amount of time. If that project goes into sort of open, like anybody can grab it, lot of people contribute and sort of jump in very quickly, it tends to fail. That's what happened to, I think, OpenStack, and there were many other reasons behind that, but I think that was the main reason, and because we were smaller, and we didn't have that much software chops, I hate to say that, but then IBM could control like hundred parties a week, at the project >> They did, and look where they are. >> And so does HP, right? >> And look where they are. All right, so I'd love to have a Power Panel on open source, certainly JJ's been in the thick of it as well as other folks in the community. I want to just kind of end on lightweight question for you guys. What have you guys learned? Go down the line, start with Jim, Sarbjeet, and then JJ we'll finish with you. Share something that you've learned over the past three months that moved you or that people should know about in tech or cloud trends that's notable. What's something new that you've learned? >> In my case, it was really just spending some time in the last few months getting to know our end users a little bit better, consumers, and some of the impact that having free internet television has on their lives, and that's really motivating... (distorted speech) Something as simple as you might take for granted, but lower income people don't necessarily have a TV that works or a hotel room that has a TV that works, or heaven forbid they're homeless and all that, so it's really gratifying to me to see people sort of tuning back into their local media through television, just by offering it on their phone and laptops. >> And what are you going to do as a result of that? Take a different action, what's the next step for you, what's the action item? >> Well we're hoping, once our product gets filled out with the major networks, et cetera, that we actually provide a community attachment to it, so that we have over-the-air television channels is the main part of the app, and then a side part of the app could be any IP stream, from city council meetings to high schools, to colleges, to local community groups, local, even religious situations or festivals or whatever, and really try to tie that in. We'd really like to use local television as a way to strengthening all local media and local communities, that's the vision at least. >> It's a great mission you guys have at Didja, thanks for sharing that. Sarbjeet, what have learned over the past quarter, three months that was notable for you and the impact and something that changed you a little bit? >> What actually I have gravitated towards in last three to six months is the blockchain, actually. I was light on that, like what it can do for us, and is there really a thing behind it, and can we leverage it. I've seen more and more actually usage of that, and sort of full SCM, supply chain management and healthcare and some other sort of use cases if you will. I'm intrigued by it, and there's a lot of activity there. I think there's some legs behind it, so I'm excited about that. >> And are doing a blockchain project as a result, or are you still tire-kicking? >> No actually, I will play with it, I'm a practitioner, I play with it, I write code and play with it and see (Jim laughs) what does that level of effort it takes to do that, and as you know, I wrote the Alexa scale couple of weeks back, and play with AI and stuff like that. So I try to do that myself before I-- >> We're hoping blockchain helps even out the TV ad economy and gets rid of middle men and makes more trusting transactions between local businesses and stuff. At least I say that, I don't really know what I'm talking about. >> It sounds good though. You get yourself a new round of funding on that sound byte alone. JJ, what have you learned in the past couple months that's new to you and changed you or made you do something different? >> I've learned over the last few months, OSS Capital is a few months and change old, and so just kind of getting started on that, and it's really, I think potentially more than one decade, probably multi-decade kind of mostly consensus building effort. There's such a huge lack of consensus and agreement in the industry. It's a fascinatingly polarizing area, the sort of general topic of open source technology, economics, value creation, value capture. So my learnings over the past few months have just intensified in terms of the lack of consensus I've seen in the industry. So I'm trying to write a little bit more about observations there and sort of put thoughts out, and that's kind of been the biggest takeaway over the last few months for me. >> I'm sure you learned about all the lawyer conversations, setting up a fund, learnings there probably too right, (Jim laughs) I mean all the detail. All right, JJ, thanks so much, Sarbjeet, Jim, thanks for joining me on this Power Panel, cloud conversation impact, to entrepreneurship, open source. Jim Long, Sarbjeet Johal and Joseph Jacks, JJ, thanks for joining us, theCUBE Conversation here in Palo Alto, I'm John Furrier, thanks for watching. >> Thanks John. (lively classical music)

(lively orchestral music) >> Hello, everyone. Welcome to this special CUBE Conversation. We're here in Palo Alto, California, theCUBE headquarters. I'm John Furrier, the cofounder of SiliconANGLE Media, cohost of theCUBE. We're here with fellow cloud influencer, friend of theCUBE, Sarbjeet Johal, who's always on Twitter. If you check out my Twitter stream, you'll find out we've always got some threads. He's always jumping in the CrowdChat and I think was in the leaderboard for our last CrowdChat on multi-cloud Kubernetes. Thanks for coming in. >> Yeah, thank you for having me here. >> Thanks for coming in. So you're very prolific on Twitter. We love the conversations. We're gettin' a lot of energy around some of the narratives that have been flowing around, obviously helped this week by the big news of IBM acquiring Red Hat for, what was it, 30, what was the number, 34? >> 34, yeah. >> $34 billion, huge premium, essentially changing the game in open source, some think, some don't, but it begs the question, you know, cloud obviously is relevant. Ginni Rometty, the CEO of IBM, actually now saying cloud is where it's at, 20% have been on the cloud, 80% have not yet moved over there, trillion-dollar market which we called, actually, I called, a few years ago when I wrote my Forbes story about Amazon, the Trillion Dollar Baby I called it. This is real. >> Yeah. So apps are moving to the cloud, value for businesses on the cloud, people are seeing accelerated timelines for shipping. Software. >> Yeah. >> Software offer is eating the world. Cloud is eating software, and data's at the center of it. So I want to get your thoughts on this, because I know that you've been talking a lot about technical debt, you know, the role of developer, cloud migration. The reality is, this is not easy. If you're doin' cloud native, it's pretty easy. >> Still pretty easy, yeah. >> If that's all you got, right, so if you're a startup and/or built on the cloud, you really got the wind at your back, and it's lookin' really good. >> Yeah. >> If you're not born in the cloud, you're an IT shop, they've been consolidating for years, and now told to jump to a competitive advantage, you literally got to make a pivot overnight. >> Yeah, actually, at high level, I think cloud consumption you can divide into two buckets, right? One is the greenfield which, as you said, it's not slam dunk, all these startups are born in cloud, and all these new projects, systems of innovation what I usually refer to those, are born in cloud, and they are operated in cloud, and at some point they will sort of fade away or die in cloud, but the hard part is the legacy applications sitting in the enterprise, right? So those are the trillion dollar sort of what IBM folks are talking about. That's a messy problem to tackle. Within that, actually, there are some low-hanging fruits. Of course, we can move those workloads to the cloud. I usually don't refer the application, the workloads as applications because people are sort of religiously attached to the applications. They feel like it's their babies, right? >> Yeah. >> So I usually say workload, so some workloads are ripe for the cloud. It's data mining, BI, and also the AI part of it, right? So but some other workloads which are not right for the cloud right now or they're hard to move or the ERP system, systems of record and systems of engagement or what we call CRMs and marketing sort of applications which are legacy ones. >> Yeah, hard-coded operationalized software frameworks and packages and vendors like Oracle. >> Yes. >> They're entrenched. >> Oracle SAP, and there's so many other software vendors that have provided tons of software to the data centers that they're sitting there, and the hard part is that nobody wants to pull the plug on the existing applications. I've seen that time and again. I have done, my team has done more than 100 data center audits from EMC and VMware days. We have seen that time and again. Nobody wants to pull the plug on the application. >> 'Cause they're runnin' in production! (laughs) >> They are running in production. And it's hard to measure the usage of those applications, also, that's a hard part of the sort of old stack, if you will. >> Yeah. So the reality is, this is kind of getting to the heart of what we wanted to talk about which is, you know, vendor hype and market realities. >> Yeah. >> The market reality is, you can't unplug legacy apps overnight, but you got a nice thing called containers and Kubernetes emerging, that's nice. >> Yeah. >> Okay, so check, I love that, but still, the reality is, is okay, then who does it? >> Yeah. >> Do I add more complexity? We just had Jerry Chen and hot startup Rockset on, they're trying to reduce the complexity by just having a more simple approach. This is a hard architectural challenge. >> It is. >> So that's one fundamental thing I want to discuss with you. And then there's the practical nature of saying assuming you get the architecture right, migrating and operating. Let's take those as separate, let's talk architecture, then we'll talk operating and migrating. >> Okay. >> Architecturally, what do people do, what are people doing, what you're seeing, what do you think is the right architecture for cloud architects, because that's a booming position. >> Yeah. >> There's more and more cloud architects out there, and the openings for cloud architects is massive. >> Yeah, I think in architecture, the microservices are on the rise. There are enabling technologies behind it. It doesn't happen sort of magically overnight. We have had some open source sort of development in that area the, the RESTful APIs actually gave the ports to the microservices. Now we can easily inter-operate between applications, right? So and our sort of, sorry I'm blanking out, so our way to divide the compute at the sort of micro-chunks from VM, virtual machine, to the container to the next level is the serverless, right? So that is giving ports to the microservices, and the integration technologies are improving at the same time. The problem of SEL lies in the data, which is the storage part and the data part and the network, and the network is closely associated with security. So security and network are two messy parts. They are in the architecture, even in the pure cloud architecture in the Kubernete world, those are two sort of hard parts. And Cisco is trying to address the network part. I speak, I spoke to some folks there, and what they are doing in that space, they are addressing the network and SCODI part, sort of deepening-- >> And it's a good time for them to do that. >> Yeah. >> Because, I mean, you go back, and you know, we covered DevNet Create, which is Susie Wee, she's a rising star at Cisco, and now she's running all of DevNet. So the developer network within Cisco's has a renaissance because, you know, you go back 20 years ago, if you were a network guy, you ran the show, I mean, everything ran the network. The network was everything. The network dictated what would happen. Then it kind of went through a funk of like now cloud native's hot and serverless, but now that programability's hitting the network because remember the holy trinity of transformation is compute, storage, and networking. (laughs) >> Yeah. >> Those aren't going away. >> Yeah, they aren't going away. >> Right, so networking now is seeing some, you know, revitalization because you can program it, you can automate it, you can throw DevOps to it. This is kind of changing the game a little bit. So I'm intrigued by the whole network piece of it because if you can automate some network with containers and Kubernetes and, say, service meshes, then it's become programmable, then you can do the automation, then it's infrastructure, it's code. >> Yeah, exactly. >> Infrastructure is code. It has to cover all three of those things. >> That is true, and another aspect is that we talk about multi-cloud all the time, which Cisco is focusing on also, like IBM, like VMware, like many other players who talk about multi-cloud, but problem with the multi-cloud right now is that you cannot take your security policies from one cloud provider to another and then just say, okay, just run there, right? So you can do the compute easy, containers, right, or Kubernetes are there, but you can't take the network as is, you cannot, you can still take the storage but not storage policies, so the policy-driven computing is still not there. >> Yeah. >> So we need, I think, more innovation in that area. >> Yeah, there's some technical issues. I talk a lot of startups, and they're jumpin' around from Azure to Amazon, and everyone comes back to Amazon because they say, and I'm not going to name names, but I'll just categorically say with what's going on is when they get to Microsoft and Oracle and IBM, the old kind of guards is they come in and they find that they check the boxes on the literature, oh, they do this, that, and that, but it's really just a lot of reverse proxies, there's a lot of homegrown stuff in there-- >> Yeah. >> That are making it work and hang together but not purely built from the ground up. >> Exactly, yeah, so they're actually sort of re-bottling the old sort of champagne kind of stuff, like they re-label old stuff and put layers of abstraction on top of it and that's why we're having those problems with the sort of legacy vendors. >> So let's get into some of the things that I know you're talking about a lot on Twitter, we're engaging on with with the community is migration, and so I want to kind of put a context to the questions so we can riff together on it. Let's just say that you and I were hired by the the CIO of a huge enterprise, financial services, pick your vertical. >> Yeah. >> Hey, Sarbjeet and John, fix my problems, and they give us the keys to the kingdom, bag of money, whatever it takes, go make it happen. What do we do, what's the first things that we do? Because they got a legacy, we know what it looks like, you got the networks, you're racking stack, top-of-rack switches, you got perimeter-based security. We got to go in and kind of level the playing field. What's our strategy, what do we what do we recommend? >> Yeah, the first thing first, right? So first, we need to know the drivers for the migration, right, what is it? Is it a cost-cutting, is it the agility, is it mergers and acquisitions? So what are the, what is the main driver? So that knowing that actually will help us like divvy up the problem, actually divide it up. The next thing, the next best practice is, I always suggest, I've done quite a few migrations, is that do the application portfolio analysis first. You want to find that low-hanging fruit which can be moved to the cloud first. The reason, main reason behind that is that your people and processes need to ease into using the cloud. I use consumption term a lot, actually on Twitter you see that, so I'm a big fan of consumption economics. So your people and processes need to adapt, like your change control, change management, ITSM, the old stuff still is valid, actually. We're giving it a new name, but those problems don't go away, right? How you log a ticket, how you how the support will react and all that stuff, so it needs to map to the cloud. SLA is another less talked about topic in our circles on Twitter, and our industry partners don't talk about, but that's another interesting part. Like what are the SLAs needed for, which applications and so forth. So first do the application profiling, find the low-hanging fruit. Go slow in the beginning, create the phases, like phase one, phase two, phase three, phase four. And it also depends number, on the number of applications, right? IBM folks were talking about that thousand average number of applications per enterprise. I think it's more than thousand, I've seen it. And that, just divvy up the problem. And then another best practice I've learned is migrate as is, do not transform and migrate, because then you're at, if something is not working over there or the performance problem or any latency problem, you will blame it on your newer architecture, if you will. Move as is, then then transform over there. And if you want me to elaborate a little more on the transformation part, I usually divide transformation into three buckets, actually this is what I tell the CIOs and CTOs and CEOs, that transformation is of three types. Well, after you move, transformation, first it is the infrastructure-led transformation. You can do the platforming and go from Windows to Linux and Linux to AIX and all that stuff, like you can go from VM to container kind of stuff, right? And the second is a process-led transformation, which is that you change your change control, change management, policy-driven computing, if you will, so you create automation there. The third thing is the application where you open the hood of the application and refactor the code and do the Web service enablement of your application so that you can weave in the systems of innovation and plug those into the existing application. So you want to open your application. That's the whole idea behind all this sort of transformation is your applications are open so you can bring in the data and take out the data as you weave. >> From your conversations and analysis, how does cloud, once migrations happen in cloud operations, how does that impact traditional network, network architecture, network security, and application performance? >> On the network side, actually, how does it, let me ask you a question, what do you mean by how does it-- >> In the old days, used a provisional VLAN. >> The older stuff? >> So I got networks out there, I got a big enterprise, okay, we know how to run the networks, but now I'm movin' to the cloud. >> Yeah. >> I'm off premises, I'm on premise, now I'm in the cloud. >> Yeah. >> How do I think about the network's differently? Whose provisioning the subnets, who's doing the VPNs? You know, where's the policy, all these policy-based things that we're startin' to see at Kubernetes. >> Yeah. >> They were traditionally like networks stuff-- >> You knew what it was. >> That's now happening at the microservices level. >> Yeah. >> So new paradigm. >> The new paradigm, actually, the whole idea is that your network folks, your storage folks, your server folks, like what they were used to be in-house, they need to be able to program, right? That's the number one thing. So you need to retrain your workforce, right? If you don't have the, you cannot retrain people overnight, and then you bring in some folks who know how to program networks and then bring those in. There's a big misconception about, from people, that the service, sorry, the service provider, which is called cloud service provider, is it responsible for the security of your applications or for the network, sort of segmentation of your network. They are not, actually, they don't have any liability over security if you read the SLAs. It's your responsibility to have the sort of right firewalling, right checks and balances in place for the network for storage, for compute, right policies in place. It's your responsibility. >> So let's talk about the, some tweets you've been doin' 'cause I've been wanting to pull the ones that I like. You tweeted a couple days ago, we don't know how to recycle failed startups. >> Yeah. (chuckles) >> Okay, and I said open source. And you picked up and brought up another image, is open source a dumping ground for failed startups? And it was interesting because what I love about open source is, in the old days of proprietary software, if the company went under, the code went under with it, but at least now, with open source, at least something can survive. But you bring up this dumping concept, that also came up in an interview earlier today with another guest which was with all this contribution coming in from vendors, it's almost like there's a dumping going on into open source in general, and you can't miss a beat without five new announcements per day that's, you know, someone's contributing their software from this project or a failed, even failed startup, you know, last hope, let's open source it. Is that good or bad, I mean, what's your take on that, what was your posture or thinking around this conversation? It is good, is it bad? >> Yeah, I believe it's, it's a economic problem, economics thing, right? So when somebody's like proprietary model doesn't work, they say, okay, let me see if this works, right? Actually, they always go first with like, okay let me sell-- >> Make money. >> Let me make money, right? A higher margin, right, everybody loves that, right? But then, if they cannot penetrate the market, they say, okay, let me make it open source, right? And then I will get the money from the support, or my own distro, like, distros are a big like open source killer, I said that a few times. Like the vendor-specific distributions of open source, they kill open source like nothing else does. Because I was at Rackspace when we open-sourced OpenStack, and I saw what happened to OpenStack. It was like eye-opening, so everybody kind of hijacked OpenStack and started putting their own sort of flavors in place. >> Yeah, yeah, we saw the outcome of that. >> Yeah. >> It niched into infrastructures of service, kind of has a special purpose-built view. >> And when I-- >> And that it comes cloud native didn't help either. Cloud grew at that time, too, talking about the 2008 timeframe. >> Yeah, yeah, and exactly. And another, why I said that was, it was in a different context, actually, I invested some money into an incubator in Berkeley, The Batchery, so we have taken what, 70-plus startups through that program so far, and I've seen that pattern there. So I will interview the people who want to bring their startup to our incubator and all that, and then after, most of them fail, right? >> Yeah. >> They kind of fade away or they leave, they definitely leave our incubator after a certain number of weeks, but then you see like what happens to them, and now also living in the Valley, you can't avoid it. I worked with 500 Startups a little bit and used to go to their demo days from the Rackspace days because we used to have a deal with them, a marketing deal, so the pattern I saw that was, there's a lot of innovation, there was a lot of brain power in these startups that we don't know what, these people just fade away. We don't have a mechanism to say, okay, hey you are doing this, and we are also doing similar stuff, we are a little more successful than, let's merge these two things and make it work. So we don't know how to recycle the startups. So that's what was on it. >> It's almost a personal network of intellectual capital. >> Yeah. >> Kind of, there needs to be a new way to network in the IP that's in people's heads. Or in this case, if it's open source, that's easy there, too, so being inaccessible. >> So there's no startup, there's no Internet of startups, if you will. >> Yeah, so there's no-- >> Hey, you start a CUBE group. (Sarbjeet laughing) You'll do it, start a CrowdChat. All right, I want to ask you about this consumption economics. >> Yeah. >> I like this concept. Can you take a minute to explain what you mean by consumption economics? You said you're all over it. I know you talk a lot about it on Twitter. >> Yes. >> What is it about, why is it important? >> Actually, the pattern I've seen in tech industry for last 25, 24 years in Silicon Valley, so the pattern I've seen is that everybody focuses on the supply side, like we do this, we like, we're going to change the way you work and all that stuff, but people usually do not focus on the consumption side of things, like people are consuming things. I'm a great fan of a theory called Jobs to Be Done theory. If you get a time, take a look at that. So what jobs people are trying to do and how you can solve that problem. Actually, if you approach your products, services from that angle, that goes a long way. Another aspect I talk about, the consumption economics, is age of micro-consumption, and again, there are reasons behind it. The main reason is there's so much thrown at us individually and and also enterprise-wise, like so much technology is thrown at us, if we try to batch, like if were ready to say, okay, we're not going to consume the technology now, and we're going to do every six months, like we're going to release every six months, or new software or new packages, and also at the same time, we will consume every six months, that doesn't work. So the whole notion when I talk about the micro-consumption is that you keep bringing the change in micro-chunks. And I think AWS has mastered the game of micro-supply, as a micro-supplier of that micro-change. >> Yeah. >> If you will. So they release-- >> And by the way, they're very customer-centric, so listening to the demand side. >> Exactly. So they kind of walk hand in hand with the customer in a way that customer wants this, so they're needing this, so let us release it. They don't wait for like old traditional model of like, okay, every year there's a new big release and there are service packs and patches and all that stuff, even though other vendors have moved along the industry. But they still have longer cycles, they still release like 10 things at a time. I think that doesn't work. So you have to give, as a supplier, to the masses of the workers of the world in HPs and IBMs, give the change in smaller chunks, don't give them monolithic. When you're marketing your stuff, even marketing message should be in micro-chunks, like or even if you created like five sort of features and sort of, let's, say in Watson, right, just give them one at a time. Be developer-friendly because developers are the people who will consume that stuff. >> Yeah, and then making it more supply, less supply side but micro-chunks or microservices or micro-supply. >> Yeah. >> Having a developer piece also plays well because they're also ones who can help assemble the micro, it's in a LEGO model of composeability. >> Yeah, exactly. >> And so I think that's definitely right. The other thing I wanted to get your thoughts on is validated by Jerry Chen at Greylock and his hot startups and a few others is my notion of stack overhaul. The changes in the stack are significant. I tweeted, and you commented on it, on the Red Hat IBM deal 'cause they were talkin' about, oh, the IBM stack is going to be everywhere, and they're talking about the IBM stack and the old full-stack developer model, but if you look at the consumption economics, you look at horizontally scalable cloud, native serverless and all those things goin' on with Kubernetes, the trend is a complete radical shifting of the stack where now the standardization is the horizontally scalable, and then the differentiations at the top of the stack, so the stack has tweaked and torqued it a little bit. >> Yeah. >> And so this is going to change a lot. Your thoughts and reaction to that concept of stack, not a complete, you know, radical wholesale change, but a tweak. >> Actually our CTO at Rackspace, John Engates, gave us a sort of speech at one of the kind of conferences here in Bay Area, the title of that was Stack, What Stack, right? So the point he was trying to make was like stack is like, we are not in the blue stack, red stack anymore, so we are a cross-stack, actually. There are a lot of the sort of small LEGO pieces, we're trying to put those together. And again, the reason behind that is because there's some enabling technology like Web services in RESTful APIs, so those have enabled us to-- >> And new kinds of glue layers, if you will. >> Yeah, yeah. >> Abstraction layers. >> Yeah, I call it digital glue. There's a new type of digital glue, and now we have, we are seeing the emergence of low code, no code sort of paradigms coming into the play, which is a long debate in itself. So they are changing the stack altogether. So everything is becoming kind of lightweight, if you will, again-- >> And more the level of granularity is getting, you know, thinner and thinner, not macro. So you know, macroservices doesn't exist. That was my, I think, my tweet, you know, macroservices or microservices? >> Yeah. >> Which one you think's better? And we know what's happening with microservices. That is the trend. >> That is the trend. >> So that is that antithesis of macro. >> Yeah. >> Or monolithic. >> Yeah, so there's a saying in tech, actually I will rephrase it, I don't know exactly how that is, so we actually tend to overestimate the impact of a technology in the short run and underestimate in the long term, right? So there's a famous saying somebody, said that, and that's, I think that's so true. What we actually wanted to do after the dot-com bust was the object-oriented, like the sort of black box services, it as, we called them Web services back then, right? >> Yeah. >> There were books written by IBM-- >> Service-oriented architecture-- >> Yeah, SOA. >> Web services, RSS came out of that. >> Yes. >> I mean, a lot of good things that are actually in part of what the vision is happening today. >> It's happening now actually, it just happening today. And mobile has changed everything, I believe, not only on the consumer side, even on the economic side. >> I mean, that's literally 16, 17 years later. >> Yes, exactly, it took that long. >> It's the gestation period. >> Yes. >> Bitcoin 10 years ago yesterday, the white paper was built. >> Yeah. >> So the acceleration's certainly happening. I know you're big fan of blockchain, you've been tweeting about it lately. Thoughts on blockchain, what's your view on blockchain? Real, going to have a big impact? >> I think it will have huge impact, actually. I've been studying on it, actually. I was light on it, now I'm a little bit, I'm reading on it this and I understand. I've talked to people who are doing this work. I think it will have a huge impact, actually. The problem right now with blockchain is that, the speed, right? >> It's slow, yeah. So yeah, it's very slow, doc slow, if you will. But I think that is a technical problem, we can solve that. There's no sort of functional problem with the blockchain. Actually, it's a beautiful thing. Another aspect which come into play is the data sovereignty. So blockchains actually are replicated throughout the world if you want the worldwide money exchange and all that kind of stuff going around. We will need to address that because the data in Switzerland needs to sit there, and data in the U.S. needs to stay in the U.S. That blockchain actually kind of, it doesn't do that. You have a copy of the same data everywhere. >> Yeah, I mean, you talk about digital software to find money, software to find data center. I mean, it's all digital. I mean, someone once said whatever gets digitized grows exponentially. (Sarbjeet laughing) Oh, that was you! >> Actually I-- >> On October 30th. >> That was, that came from a book, actually. It's called Exponential Organizations. Actually, they're two great books I will recommend for everybody to read, actually there's a third one also. So (laughs) the two are, one is Exponential Organizations. It's a pretty thin book, you should take, pick it up. And it talks about like whatever get digitized grows exponentially, but our organizations are not, like geared towards handling that exponential growth. And the other one is Consumption Economics. The title of the book is Consumption Economics, actually. I saw that book after I started talking about it, consumption economics myself. I'm an economics major, actually, so that's why I talk about that kind of stuff and those kind comments, so. >> Well, and I think one of the things, I mean, we've talked about this privately when we've seen each other at some of theCUBE events, I think economics, the chief economic officer role will be a title that will be as powerful as a CSO, chief security officer, because consumption economics, token economics which is the crypto kind of dynamic of gamification or network effects, you got economics in cloud, you got all kinds of new dynamics that are now instrumented that need, that are, they're throwin' off numbers. So there's math behind things, whether it's cryptocurrency, whether it's math behind reputation, or any anything. >> Yeah. >> Math is driving everything, machine learning, heavy math-oriented algorithms. >> Yeah, actually at the end of the day, economics matters, right? That's what we are all trying to do, right? We're trying to do things faster cheaper, right? That's what automation is all about. >> And simplifying, too. >> And simplifying service. >> You can't throw complexity in, more complexity. >> Yeah. >> That's exponential complexity. >> Sometimes while we are trying to simplify things, and I also said, like many times the tech is like medicine, right? I've said that many times. (laughs) Tech is like medicine, every pill has a side effect. Sometimes when we are trying to simplify stuff, we add more complexity, so. >> Yeah. What's worse, the pain or the side effects? Pick your thing. >> Yeah, you pick your thing. And your goal is to sort of reduce the side effects. They will be there, they will be there. And what is digital transformation? It's all about business. It's not, less about technology, technology's a small piece of that. It's more about business models, right? So we're trying to, when we talk about micro-consumption and the sharing economy, they're kind of similar concepts, right? So Ubers of the world and Airbnbs all over the world, so those new business models have been enabled by technology, and we want to to replicate that with the medicine, with the, I guess, education, autos, and you name it. >> So we obviously believe in microcontent at theCUBE. We've got the Clipper tool, the search engine. >> I love that. >> So the CUBEnomics. It's a book that we should be getting on right away. >> Yeah, we should do that! >> CUBEnomics. >> CUBEnomics, yeah. >> The economics behind theCUBE interviews. Sarbjeet, thank you for coming on. Great to see you, and thank you for your participation-- >> Thanks, John. >> And engagement online in our digital community. We love chatting with you and always great to see you, and let's talk more about economics and digital exponential growth. It's certainly happening. Thanks for coming in, appreciate it. >> It was great having, being here, actually. >> All right, the CUBE Conversation, here in Palo Alto Studios here for theCUBE headquarters. I'm John Furrier, thanks for watching. (lively orchestral music)

(soft music) >> Announcer: TheCUBE's live coverage is made possible by funding from Dell Technologies. Creating technologies that drive human progress. (upbeat music) >> Welcome back to Spain, everybody. We're here at the Fira in MWC23. Is just an amazing day. This place is packed. They said 80,000 people. I think it might even be a few more walk-ins. I'm Dave Vellante, Lisa Martin is here, David Nicholson. But right now we have the Analyst Hot Takes with three friends of theCUBE. Chris Lewis is back again with me in the co-host seat. Zeus Kerravala, analyst extraordinaire. Great to see you, Z. and Sarbjeet SJ Johal. Good to see you again, theCUBE contributor. And that's my new name for him. He says that is his nickname. Guys, thanks for coming back on. We got the all male panel, sorry, but it is what it is. So Z, is this the first time you've been on it at MWC. Take aways from the show, Hot Takes. What are you seeing? Same wine, new bottle? >> In a lot of ways, yeah. I mean, I was talking to somebody this earlier that if you had come from like MWC five years ago to this year, a lot of the themes are the same. Telco transformation, cloud. I mean, 5G is a little new. Sustainability is certainly a newer theme here. But I think it highlights just the difficulty I think the telcos have in making this transformation. And I think, in some ways, I've been unfair to them in some degree 'cause I've picked on them in the past for not moving fast enough. These are, you know, I think these kind of big transformations almost take like a perfect storm of things that come together to happen, right? And so, in the past, we had technologies that maybe might have lowered opex, but they're hard to deploy. They're vertically integrated. We didn't have the software stacks. But it appears today that between the cloudification of, you know, going to cloud native, the software stacks, the APIs, the ecosystems, I think we're actually in a position to see this industry finally move forward. >> Yeah, and Chris, I mean, you have served this industry for a long time. And you know, when you, when you do that, you get briefed as an analyst, you actually realize, wow, there's a lot of really smart people here, and they're actually, they have challenges, they're working through it. So Zeus was saying he's been tough on the industry. You know, what do you think about how the telcos have evolved in the last five years? >> I think they've changed enormously. I think the problem we have is we're always looking for the great change, the big step change, and there is no big step change in a way. What telcos deliver to us as individuals, businesses, society, the connectivity piece, that's changed. We get better and better and more reliable connectivity. We're shunting a load more capacity through. What I think has really changed is their attitude to their suppliers, their attitude to their partners, and their attitude to the ecosystem in which they play. Understanding that connectivity is not the end game. Connectivity is part of the emerging end game where it will include storage, compute, connect, and analytics and everything else. So I think the realization that they are not playing their own game anymore, it's a much more open game. And some things they will continue to do, some things they'll stop doing. We've seen them withdraw from moving into adjacent markets as much as we used to see. So a lot of them in the past went off to try and do movies, media, and a lot went way way into business IT stuff. They've mainly pulled back from that, and they're focusing on, and let's face it, it's not just a 5G show. The fixed environment is unbelievably important. We saw that during the pandemic. Having that fixed broadband connection using wifi, combining with cellular. We love it. But the problem as an industry is that the users often don't even know the connectivity's there. They only know when it doesn't work, right? >> If it's not media and it's not business services, what is it? >> Well, in my view, it will be enabling third parties to deliver the services that will include media, that will include business services. So embedding the connectivity all the way into the application that gets delivered or embedding it so the quality mechanism deliver the gaming much more accurately or, I'm not a gamer, so I can't comment on that. But no, the video quality if you want to have a high quality video will come through better. >> And those cohorts will pay for that value? >> Somebody will pay somewhere along the line. >> Seems fuzzy to me. >> Me too. >> I do think it's use case dependent. Like you look at all the work Verizon did at the Super Bowl this year, that's a perfect case where they could have upsold. >> Explain that. I'm not familiar with it. >> So Verizon provided all the 5G in the Super Bowl. They provided a lot of, they provided private connectivity for the coaches to talk to the sidelines. And that's a mission critical application, right? In the NFL, if one side can't talk, the other side gets shut down. You can't communicate with the quarterback or the coaches. There's a lot of risk at that. So, but you know, there's a case there, though, I think where they could have even made that fan facing. Right? And if you're paying 2000 bucks to go to a game, would you pay 50 bucks more to have a higher tier of bandwidth so you can post things on social? People that go there, they want people to know they were there. >> Every football game you go to, you can't use your cell. >> Analyst: Yeah, I know, right? >> All right, let's talk about developers because we saw the eight APIs come out. I think ISVs are going to be a big part of this. But it's like Dee Arthur said. Hey, eight's better than zero, I guess. Okay, so, but so the innovation is going to come from ISVs and developers, but what are your hot takes from this show and now day two, we're a day and a half in, almost two days in. >> Yeah, yeah. There's a thing that we have talked, I mentioned many times is skills gravity, right? Skills have gravity, and also, to outcompete, you have to also educate. That's another theme actually of my talks is, or my research is that to puts your technology out there to the practitioners, you have to educate them. And that's the only way to democratize your technology. What telcos have been doing is they have been stuck to the proprietary software and proprietary hardware for too long, from Nokia's of the world and other vendors like that. So now with the open sourcing of some of the components and a few others, right? And they're open source space and antenna, you know? Antennas are becoming software now. So with the invent of these things, which is open source, it helps us democratize that to the other sort of skirts of the practitioners, if you will. And that will bring in more applications first into the IOT space, and then maybe into the core sort of California, if you will. >> So what does a telco developer look like? I mean, all the blockchain developers and crypto developers are moving into generative AI, right? So maybe those worlds come together. >> You'd like to think though that the developers would understand everything's network centric today. So you'd like to think they'd understand that how the network responds, you know, you'd take a simple app like Zoom or something. If it notices the bandwidth changes, it should knock down the resolution. If it goes up it, then you can add different features and things and you can make apps a lot smarter that way. >> Well, G2 was saying today that they did a deal with Mercedes, you know this probably better than I do, where they're going to embed WebEx in the car. And if you're driving, it'll shut off the camera. >> Of course. >> I'm like, okay. >> I'll give you a better example though. >> But that's my point. Like, isn't there more that we can do? >> You noticed down on the SKT stand the little helicopter. That's a vertical lift helicopter. So it's an electric vertical lift helicopter. Just think of that for a second. And then think of the connectivity to control that, to securely control that. And then I was recently at an event with Zeus actually where we saw an air traffic control system where there was no people manning the tower. It was managed by someone remotely with all the cameras around them. So managing all of those different elements, we call it IOT, but actually it's way more than what we thought of as IOT. All those components connecting, communicating securely and safely. 'Cause I don't want that helicopter to come down on my head, do you? (men laugh) >> Especially if you're in there. (men laugh) >> Okay, so you mentioned sustainability. Everybody's talking about power. I don't know if you guys have a lot of experience around TCO, but I'm trying to get to, well, is this just because energy costs are so high, and then when the energy becomes cheap again, nobody's going to pay any attention to it? Or is this the real deal? >> So one of the issues around the, if we want to experience all that connectivity locally or that helicopter wants to have that connectivity, we have to ultimately build denser, more reliable networks. So there's a CapEx, we're going to put more base stations in place. We need more fiber in the ground to support them. Therefore, the energy consumption will go up. So we need to be more efficient in the use of energy. Simple as that. >> How much of the operating expense is energy? Like what percent of it? Is it 10%? Is it 20%? Is it, does anybody know? >> It depends who you ask and it depends on the- >> I can't get an answer to that. I mean, in the enterprise- >> Analyst: The data centers? >> Yeah, the data centers. >> We have the numbers. I think 10 to 15%. >> It's 10 to 12%, something like that. Is it much higher? >> I've got feeling it's 30%. >> Okay, so if it's 30%, that's pretty good. >> I do think we have to get better at understanding how to measure too. You know, like I was talking with John Davidson at Sysco about this that every rev of silicon they come out with uses more power, but it's a lot more dense. So at the surface, you go, well, that's using a lot more power. But you can consolidate 10 switches down to two switches. >> Well, Intel was on early and talking about how they can intelligently control the cores. >> But it's based off workload, right? That's the thing. So what are you running over it? You know, and so, I don't think our industry measures that very well. I think we look at things kind of boxed by box versus look at total consumption. >> Well, somebody else in theCUBE was saying they go full throttle. That the networks just say just full throttle everything. And that obviously has to change from the power consumption standpoint. >> Obviously sustainability and sensory or sensors from IOT side, they go hand in hand. Just simple examples like, you know, lights in the restrooms, like in public areas. Somebody goes in there and just only then turns. The same concept is being applied to servers and compute and storage and every aspects and to networks as well. >> Cell tower. >> Yeah. >> Cut 'em off, right? >> Like the serverless telco? (crosstalk) >> Cell towers. >> Well, no, I'm saying, right, but like serverless, you're not paying for the compute when you're not using it, you know? >> It is serverless from the economics point of view. Yes, it's like that, you know? It goes to the lowest level almost like sleep on our laptops, sleep level when you need more power, more compute. >> I mean, some of that stuff's been in networking equipment for a long time, it just never really got turned on. >> I want to ask you about private networks. You wrote a piece, Athenet was acquired by HPE right after Dell announced a relationship with Athenet, which was kind of, that was kind of funny. And so a good move, good judo move by by HP. I asked Dell about it, and they said, look, we're open. They said the right things. We'll see, but I think it's up to HP. >> Well, and the network inside Dell is. >> Yeah, okay, so. Okay, cool. So, but you said something in that article you wrote on Silicon Angle that a lot of people feel like P5G is going to basically replace wireless or cannibalize wireless. You said you didn't agree with that. Explain why? >> Analyst: Wifi. >> Wifi, sorry, I said wireless. >> No, that's, I mean that's ridiculous. Pat Gelsinger said that in his last VMware, which I thought was completely irresponsible. >> That it was going to cannibalize? >> Cannibalize wifi globally is what he said, right? Now he had Verizon on stage with him, so. >> Analyst: Wifi's too inexpensive and flexible. >> Wifi's cheap- >> Analyst: It's going to embed really well. Embedded in that. >> It's reached near ubiquity. It's unlicensed. So a lot of businesses don't want to manage their own spectrum, right? And it's great for this, right? >> Analyst: It does the job. >> For casual connectivity. >> Not today. >> Well, it does for the most part. Right now- >> For the most part. But never at these events. >> If it's engineered correctly, it will. Right? Where you need private 5G is when reliability is an absolute must. So, Chris, you and I visited the Port of Rotterdam, right? So they're putting 5G, private 5G there, but there's metal containers everywhere, right? And that's going to disrupt it. And so there are certain use cases where it makes sense. >> I've been in your basement, and you got some pretty intense equipment in there. You have private 5G in there. >> But for carpeted offices, it does not make sense to bring private. The economics don't make any sense. And you know, it runs hot. >> So where's it going to be used? Give us some examples of where we should be looking for. >> The early ones are obviously in mining, and you say in ports, in airports. It broadens cities because you've got so many moving parts in there, and always think about it, very expensive moving parts. The cranes in the port are normally expensive piece of kits. You're moving that, all that logistics around. So managing that over a distance where the wifi won't work over the distance. And in mining, we're going to see enormous expensive trucks moving around trying to- >> I think a great new use case though, so the Cleveland Browns actually the first NFL team to use it for facial recognition to enter the stadium. So instead of having to even pull your phone out, it says, hey Dave Vellante. You've got four tickets, can we check you all in? And you just walk through. You could apply that to airports. You could do put that in a hotel. You could walk up and check in. >> Analyst: Retail. >> Yeah, retail. And so I think video, realtime video analytics, I think it's a perfect use case for that. >> But you don't need 5G to do that. You could do that through another mechanism, couldn't you? >> You could do wire depending on how mobile you want to do it. Like in a stadium, you're pulling those things in and out all the time. You're moving 'em around and things, so. >> Yeah, but you're coming in at a static point. >> I'll take the contrary view here. >> See, we can't even agree on that. (men laugh) >> Yeah, I love it. Let's go. >> I believe the reliability of connection is very important, right? And the moving parts. What are the moving parts in wifi? We have the NIC card, you know, the wifi card in these suckers, right? In a machine, you know? They're bigger in size, and the radios for 5G are smaller in size. So neutralization is important part of the whole sort of progress to future, right? >> I think 5G costs as well. Yes, cost as well. But cost, we know that it goes down with time, right? We're already talking about 60, and the 5G stuff will be good. >> Actually, sorry, so one of the big boom areas at the moment is 4G LTE because the component price has come down so much, so it is affordable, you can afford to bring it all together. People don't, because we're still on 5G, if 5G standalone everywhere, you're not going to get a consistent service. So those components are unbelievably important. The skillsets of the people doing integration to bring them all together, unbelievably important. And the business case within the business. So I was talking to one of the heads of one of the big retail outlets in the UK, and I said, when are you going to do 5G in the stores? He said, well, why would I tear out all the wifi? I've got perfectly functioning wifi. >> Yeah, that's true. It's already there. But I think the technology which disappears in front of you, that's the best technology. Like you don't worry about it. You don't think it's there. Wifi, we think we think about that like it's there. >> And I do think wifi 5G switching's got to get easier too. Like for most users, you don't know which is better. You don't even know how to test it. And to your point, it does need to be invisible where the user doesn't need to think about it, right? >> Invisible. See, we came back to invisible. We talked about that yesterday. Telecom should be invisible. >> And it should be, you know? You don't want to be thinking about telecom, but at the same time, telecoms want to be more visible. They want to be visible like Netflix, don't they? I still don't see the path. It's fuzzy to me the path of how they're not going to repeat what happened with the over the top providers if they're invisible. >> Well, if you think about what telcos delivers to consumers, to businesses, then extending that connectivity into your home to help you support secure and extend your connection into Zeus's basement, whatever it is. Obviously that's- >> His awesome setup down there. >> And then in the business environment, there's a big change going on from the old NPLS networks, the old rigid structures of networks to SD1 where the control point is moved outside, which can be under control of the telco, could be under the control of a third party integrator. So there's a lot changing. I think we obsess about the relative role of the telco. The demand is phenomenal for connectivity. So address that, fulfill that. And if they do that, then they'll start to build trust in other areas. >> But don't you think they're going to address that and fulfill that? I mean, they're good at it. That's their wheelhouse. >> And it's a 1.6 trillion market, right? So it's not to be sniffed at. That's fixed on mobile together, obviously. But no, it's a big market. And do we keep changing? As long as the service is good, we don't move away from it. >> So back to the APIs, the eight APIs, right? >> I mean- >> Eight APIs is a joke actually almost. I think they released it too early. The release release on the main stage, you know? Like, what? What is this, right? But of course they will grow into hundreds and thousands of APIs. But they have to spend a lot of time and effort in that sort of context. >> I'd actually like to see the GSMA work with like AWS and Microsoft and VMware and software companies and create some standardization across their APIs. >> Yeah. >> I spoke to them yes- >> We're trying to reinvent them. >> Is that not what they're doing? >> No, they said we are not in the business of a defining standards. And they used a different term, not standard. I mean, seriously. I was like, are you kidding me? >> Let's face it, there aren't just eight APIs out there. There's so many of them. The TM forum's been defining when it's open data architecture. You know, the telcos themselves are defining them. The standards we talked about too earlier with Danielle. There's a lot of APIs out there, but the consistency of APIs, so we can bring them together, to bring all the different services together that will support us in our different lives is really important. I think telcos will do it, it's in their interest to do it. >> All right, guys, we got to wrap. Let's go around the horn here, starting with Chris, Zeus, and then Sarbjeet, just bring us home. Number one hot take from Mobile World Congress MWC23 day two. >> My favorite hot take is the willingness of all the participants who have been traditional telco players who looked inwardly at the industry looking outside for help for partnerships, and to build an ecosystem, a more open ecosystem, which will address our requirements. >> Zeus? >> Yeah, I was going to talk about ecosystem. I think for the first time ever, when I've met with the telcos here, I think they're actually, I don't think they know how to get there yet, but they're at least aware of the fact that they need to understand how to build a big ecosystem around them. So if you think back like 50 years ago, IBM and compute was the center of everything in your company, and then the ecosystem surrounded it. I think today with digital transformation being network centric, the telcos actually have the opportunity to be that center of excellence, and then build an ecosystem around them. I think the SIs are actually in a really interesting place to help them do that 'cause they understand everything top to bottom that I, you know, pre pandemic, I'm not sure the telcos were really understand. I think they understand it today, I'm just not sure they know how to get there. . >> Sarbjeet? >> I've seen the lot of RN demos and testing companies and I'm amazed by it. Everything is turning into software, almost everything. The parts which are not turned into software. I mean every, they will soon. But everybody says that we need the hardware to run something, right? But that hardware, in my view, is getting miniaturized, and it's becoming smaller and smaller. The antennas are becoming smaller. The equipment is getting smaller. That means the cost on the physicality of the assets is going down. But the cost on the software side will go up for telcos in future. And telco is a messy business. Not everybody can do it. So only few will survive, I believe. So that's what- >> Software defined telco. So I'm on a mission. I'm looking for the monetization path. And what I haven't seen yet is, you know, you want to follow the money, follow the data, I say. So next two days, I'm going to be looking for that data play, that potential, the way in which this industry is going to break down the data silos I think there's potential goldmine there, but I haven't figured out yet. >> That's a subject for another day. >> Guys, thanks so much for coming on. You guys are extraordinary partners of theCUBE friends, and great analysts and congratulations and thank you for all you do. Really appreciate it. >> Analyst: Thank you. >> Thanks a lot. >> All right, this is a wrap on day two MWC 23. Go to siliconangle.com for all the news. Where Rob Hope and team are just covering all the news. John Furrier is in the Palo Alto studio. We're rocking all that news, taking all that news and putting it on video. Go to theCUBE.net, you'll see everything on demand. Thanks for watching. This is a wrap on day two. We'll see you tomorrow. (soft music)

(gentle music) >> Okay, welcome back to Supercloud 2, live here in Palo Alto, California for our live stage performance. Supercloud 2 is our second Supercloud event. We're going to get these out as fast as we can every couple months. It's our second one, you'll see two and three this year. I'm John Furrier, my co-host, Dave Vellante. A panel here to break down the Supercloud momentum, the wave, and the developer impact that we bringing back Vittorio Viarengo, who's a VP for Cross-Cloud Services at VMware. Sarbjeet Johal, industry influencer and Analyst at StackPayne, his company, Cube alumni and Influencer. Sarbjeet, great to see you. Vittorio, thanks for coming back. >> Nice to be here. >> My pleasure. >> Vittorio, you just gave a keynote where we unpacked the cross-cloud services, what VMware is doing, how you guys see it, not just from VMware's perspective, but VMware looking out broadly at the industry and developers came up and you were like, "Developers, developer, developers", kind of a goof on the Steve Ballmer famous meme that everyone's seen. This is a huge star, sorry, I mean a big piece of it. The developers are the canary in the coal mines. They're the ones who are being asked to code the digital transformation, which is fully business transformation and with the market the way it is right now in terms of the accelerated technology, every enterprise grade business model's changing. The technology is evolving, the builders are kind of, they want go faster. I'm saying they're stuck in a way, but that's my opinion, but there's a lot of growth. >> Yeah. >> The impact, they got to get released up and let it go. Those developers need to accelerate faster. It's been a big part of productivity, and the conversations we've had. So developer impact is huge in Supercloud. What's your, what do you guys think about this? We'll start with you, Sarbjeet. >> Yeah, actually, developers are the masons of the digital empires I call 'em, right? They lay every brick and build all these big empires. On the left side of the SDLC, or the, you know, when you look at the system operations, developer is number one cost from economic side of things, and from technology side of things, they are tech hungry people. They are developers for that reason because developer nights are long, hours are long, they forget about when to eat, you know, like, I've been a developer, I still code. So you want to keep them happy, you want to hug your developers. We always say that, right? Vittorio said that right earlier. The key is to, in this context, in the Supercloud context, is that developers don't mind mucking around with platforms or APIs or new languages, but they hate the infrastructure part. That's a fact. They don't want to muck around with servers. It's friction for them, it is like they don't want to muck around even with the VMs. So they want the programmability to the nth degree. They want to automate everything, so that's how they think and cloud is the programmable infrastructure, industrialization of infrastructure in many ways. So they are happy with where we are going, and we need more abstraction layers for some developers. By the way, I have this sort of thinking frame for last year or so, not all developers are same, right? So if you are a developer at an ISV, you behave differently. If you are a developer at a typical enterprise, you behave differently or you are forced to behave differently because you're not writing software.- >> Well, developers, developers have changed, I mean, Vittorio, you and I were talking earlier on the keynote, and this is kind of the key point is what is a developer these days? If everything is software enabled, I mean, even hardware interviews we do with Nvidia, and Amazon and other people building silicon, they all say the same thing, "It's software on a chip." So you're seeing the role of software up and down the stack and the role of the stack is changing. The old days of full stack developer, what does that even mean? I mean, the cloud is a half a stack kind of right there. So, you know, developers are certainly more agile, but cloud native, I mean VMware is epitome of operations, IT operations, and the Tan Zoo initiative, you guys started, you went after the developers to look at them, and ask them questions, "What do you need?", "How do you transform the Ops from virtualization?" Again, back to your point, so this hardware abstraction, what is software, what is cloud native? It's kind of messy equation these days. How do you guys grokel with that? >> I would argue that developers don't want the Supercloud. I dropped that up there, so, >> Dave: Why not? >> Because developers, they, once they get comfortable in AWS or Google, because they're doing some AI stuff, which is, you know, very trendy right now, or they are in IBM, any of the IPA scaler, professional developers, system developers, they love that stuff, right? Yeah, they don't, the infrastructure gets in the way, but they're just, the problem is, and I think the Supercloud should be driven by the operators because as we discussed, the operators have been left behind because they're busy with day-to-day jobs, and in most cases IT is centralized, developers are in the business units. >> John: Yeah. >> Right? So they get the mandate from the top, say, "Our bank, they're competing against". They gave teenagers or like young people the ability to do all these new things online, and Venmo and all this integration, where are we? "Oh yeah, we can do it", and then build it, and then deploy it, "Okay, we caught up." but now the operators are back in the private cloud trying to keep the backend system running and so I think the Supercloud is needed for the primarily, initially, for the operators to get in front of the developers, fit in the workflow, but lay the foundation so it is secure.- >> So, so I love this thinking because I love the rift, because the rift points to what is the target audience for the value proposition and if you're a developer, Supercloud enables you so you shouldn't have to deal with Supercloud. >> Exactly. >> What you're saying is get the operating environment or operating system done properly, whether it's architecture, building the platform, this comes back to architecture platform conversations. What is the future platform? Is it a vendor supplied or is it customer created platform? >> Dave: So developers want best to breed, is what you just said. >> Vittorio: Yeah. >> Right and operators, they, 'cause developers don't want to deal with governance, they don't want to deal with security, >> No. >> They don't want to deal with spinning up infrastructure. That's the role of the operator, but that's where Supercloud enables, to John's point, the developer, so to your question, is it a platform where the platform vendor is responsible for the architecture, or there is it an architectural standard that spans multiple clouds that has to emerge? Based on what you just presented earlier, Vittorio, you are the determinant of the architecture. It's got to be open, but you guys determine that, whereas the nirvana is, "Oh no, it's all open, and it just kind of works." >> Yeah, so first of all, let's all level set on one thing. You cannot tell developers what to do. >> Dave: Right, great >> At least great developers, right? Cannot tell them what to do. >> Dave: So that's what, that's the way I want to sort of, >> You can tell 'em what's possible. >> There's a bottle on that >> If you tell 'em what's possible, they'll test it, they'll look at it, but if you try to jam it down their throat, >> Yeah. >> Dave: You can't tell 'em how to do it, just like your point >> Let me answer your answer the question. >> Yeah, yeah. >> So I think we need to build an architect, help them build an architecture, but it cannot be proprietary, has to be built on what works in the cloud and so what works in the cloud today is Kubernetes, is you know, number of different open source project that you need to enable and then provide, use this, but when I first got exposed to Kubernetes, I said, "Hallelujah!" We had a runtime that works the same everywhere only to realize there are 12 different distributions. So that's where we come in, right? And other vendors come in to say, "Hey, no, we can make them all look the same. So you still use Kubernetes, but we give you a place to build, to set those operation policy once so that you don't create friction for the developers because that's the last thing you want to do." >> Yeah, actually, coming back to the same point, not all developers are same, right? So if you're ISV developer, you want to go to the lowest sort of level of the infrastructure and you want to shave off the milliseconds from to get that performance, right? If you're working at AWS, you are doing that. If you're working at scale at Facebook, you're doing that. At Twitter, you're doing that, but when you go to DMV and Kansas City, you're not doing that, right? So your developers are different in nature. They are given certain parameters to work with, certain sort of constraints on the budget side. They are educated at a different level as well. Like they don't go to that end of the degree of sort of automation, if you will. So you cannot have the broad stroking of developers. We are talking about a citizen developer these days. That's a extreme low, >> You mean Low-Code. >> Yeah, Low-Code, No-code, yeah, on the extreme side. On one side, that's citizen developers. On the left side is the professional developers, when you say developers, your mind goes to the professional developers, like the hardcore developers, they love the flexibility, you know, >> John: Well app, developers too, I mean. >> App developers, yeah. >> You're right a lot of, >> Sarbjeet: Infrastructure platform developers, app developers, yes. >> But there are a lot of customers, its a spectrum, you're saying. >> Yes, it's a spectrum >> There's a lot of customers don't want deal with that muck. >> Yeah. >> You know, like you said, AWS, Twitter, the sophisticated developers do, but there's a whole suite of developers out there >> Yeah >> That just want tools that are abstracted. >> Within a company, within a company. Like how I see the Supercloud is there shouldn't be anything which blocks the developers, like their view of the world, of the future. Like if you're blocked as a developer, like something comes in front of you, you are not developer anymore, believe me, (John laughing) so you'll go somewhere else >> John: First of all, I'm, >> You'll leave the company by the way. >> Dave: Yeah, you got to quit >> Yeah, you will quit, you will go where the action is, where there's no sort of blockage there. So like if you put in front of them like a huge amount of a distraction, they don't like it, so they don't, >> Well, the idea of a developer, >> Coming back to that >> Let's get into 'cause you mentioned platform. Get year in the term platform engineering now. >> Yeah. >> Platform developer. You know, I remember back in, and I think there's still a term used today, but when I graduated my computer science degree, we were called "Software engineers," right? Do people use that term "Software engineering", or is it "Software development", or they the same, are they different? >> Well, >> I think there's a, >> So, who's engineering what? Are they engineering or are they developing? Or both? Well, I think it the, you made a great point. There is a factor of, I had the, I was blessed to work with Adam Bosworth, that is the guy that created some of the abstraction layer, like Visual Basic and Microsoft Access and he had so, he made his whole career thinking about this layer, and he always talk about the professional developers, the developers that, you know, give him a user manual, maybe just go at the APIs, he'll build anything, right, from system engine, go down there, and then through obstruction, you get the more the procedural logic type of engineers, the people that used to be able to write procedural logic and visual basic and so on and so forth. I think those developers right now are a little cut out of the picture. There's some No-code, Low-Code environment that are maybe gain some traction, I caught up with Adam Bosworth two weeks ago in New York and I asked him "What's happening to this higher level developers?" and you know what he is told me, and he is always a little bit out there, so I'm going to use his thought process here. He says, "ChapGPT", I mean, they will get to a point where this high level procedural logic will be written by, >> John: Computers. >> Computers, and so we may not need as many at the high level, but we still need the engineers down there. The point is the operation needs to get in front of them >> But, wait, wait, you seen the ChatGPT meme, I dunno if it's a Dilbert thing where it's like, "Time to tic" >> Yeah, yeah, yeah, I did that >> "Time to develop the code >> Five minutes, time to decode", you know, to debug the codes like five hours. So you know, the whole equation >> Well, this ChatGPT is a hot wave, everyone's been talking about it because I think it illustrates something that's NextGen, feels NextGen, and it's just getting started so it's going to get better. I mean people are throwing stones at it, but I think it's amazing. It's the equivalent of me seeing the browser for the first time, you know, like, "Wow, this is really compelling." This is game-changing, it's not just keyword chat bots. It's like this is real, this is next level, and I think the Supercloud wave that people are getting behind points to that and I think the question of Ops and Dev comes up because I think if you limit the infrastructure opportunity for a developer, I think they're going to be handicapped. I mean that's a general, my opinion, the thesis is you give more aperture to developers, more choice, more capabilities, more good things could happen, policy, and that's why you're seeing the convergence of networking people, virtualization talent, operational talent, get into the conversation because I think it's an infrastructure engineering opportunity. I think this is a seminal moment in a new stack that's emerging from an infrastructure, software virtualization, low-code, no-code layer that will be completely programmable by things like the next Chat GPT or something different, but yet still the mechanics and the plumbing will still need engineering. >> Sarbjeet: Oh yeah. >> So there's still going to be more stuff coming on. >> Yeah, we have, with the cloud, we have made the infrastructure programmable and you give the programmability to the programmer, they will be very creative with that and so we are being very creative with our infrastructure now and on top of that, we are being very creative with the silicone now, right? So we talk about that. That's part of it, by the way. So you write the code to the particle's silicone now, and on the flip side, the silicone is built for certain use cases for AI Inference and all that. >> You saw this at CES? >> Yeah, I saw at CES, the scenario is this, the Bosch, I spoke to Bosch, I spoke to John Deere, I spoke to AWS guys, >> Yeah. >> They were showcasing their technology there and I was spoke to Azure guys as well. So the Bosch is a good example. So they are building, they are right now using AWS. I have that interview on camera, I will put it some sometime later on there online. So they're using AWS on the back end now, but Bosch is the number one, number one or number two depending on what day it is of the year, supplier of the componentry to the auto industry, and they are creating a platform for our auto industry, so is Qualcomm actually by the way, with the Snapdragon. So they told me that customers, their customers, BMW, Audi, all the manufacturers, they demand the diversity of the backend. Like they don't want all, they, all of them don't want to go to AWS. So they want the choice on the backend. So whatever they cook in the middle has to work, they have to sprinkle the data for the data sovereign side because they have Chinese car makers as well, and for, you know, for other reasons, competitive reasons and like use. >> People don't go to, aw, people don't go to AWS either for political reasons or like competitive reasons or specific use cases, but for the most part, generally, I haven't met anyone who hasn't gone first choice with either, but that's me personally. >> No, but they're building. >> Point is the developer wants choice at the back end is what I'm hearing, but then finish that thought. >> Their developers want the choice, they want the choice on the back end, number one, because the customers are asking for, in this case, the customers are asking for it, right? But the customers requirements actually drive, their economics drives that decision making, right? So in the middle they have to, they're forced to cook up some solution which is vendor neutral on the backend or multicloud in nature. So >> Yeah, >> Every >> I mean I think that's nirvana. I don't think, I personally don't see that happening right now. I mean, I don't see the parody with clouds. So I think that's a challenge. I mean, >> Yeah, true. >> I mean the fact of the matter is if the development teams get fragmented, we had this chat with Kit Colbert last time, I think he's going to come on and I think he's going to talk about his keynote in a few, in an hour or so, development teams is this, the cloud is heterogenous, which is great. It's complex, which is challenging. You need skilled engineering to manage these clouds. So if you're a CIO and you go all in on AWS, it's hard. Then to then go out and say, "I want to be completely multi-vendor neutral" that's a tall order on many levels and this is the multicloud challenge, right? So, the question is, what's the strategy for me, the CIO or CISO, what do I do? I mean, to me, I would go all in on one and start getting hedges and start playing and then look at some >> Crystal clear. Crystal clear to me. >> Go ahead. >> If you're a CIO today, you have to build a platform engineering team, no question. 'Cause if we agree that we cannot tell the great developers what to do, we have to create a platform engineering team that using pieces of the Supercloud can build, and let's make this very pragmatic and give examples. First you need to be able to lay down the run time, okay? So you need a way to deploy multiple different Kubernetes environment in depending on the cloud. Okay, now we got that. The second part >> That's like table stakes. >> That are table stake, right? But now what is the advantage of having a Supercloud service to do that is that now you can put a policy in one place and it gets distributed everywhere consistently. So for example, you want to say, "If anybody in this organization across all these different buildings, all these developers don't even know, build a PCI compliant microservice, They can only talk to PCI compliant microservice." Now, I sleep tight. The developers still do that. Of course they're going to get their hands slapped if they don't encrypt some messages and say, "Oh, that should have been encrypted." So number one. The second thing I want to be able to say, "This service that this developer built over there better satisfy this SLA." So if the SLA is not satisfied, boom, I automatically spin up multiple instances to certify the SLA. Developers unencumbered, they don't even know. So this for me is like, CIO build a platform engineering team using one of the many Supercloud services that allow you to do that and lay down. >> And part of that is that the vendor behavior is such, 'cause the incentive is that they don't necessarily always work together. (John chuckling) I'll give you an example, we're going to hear today from Western Union. They're AWS shop, but they want to go to Google, they want to use some of Google's AI tools 'cause they're good and maybe they're even arguably better, but they're also a Snowflake customer and what you'll hear from them is Amazon and Snowflake are working together so that SageMaker can be integrated with Snowflake but Google said, "No, you want to use our AI tools, you got to use BigQuery." >> Yeah. >> Okay. So they say, "Ah, forget it." So if you have a platform engineering team, you can maybe solve some of that vendor friction and get competitive advantage. >> I think that the future proximity concept that I talk about is like, when you're doing one thing, you want to do another thing. Where do you go to get that thing, right? So that is very important. Like your question, John, is that your point is that AWS is ahead of the pack, which is true, right? They have the >> breadth of >> Infrastructure by a lot >> infrastructure service, right? They breadth of services, right? So, how do you, When do you bring in other cloud providers, right? So I believe that you should standardize on one cloud provider, like that's your primary, and for others, bring them in on as needed basis, in the subsection or sub portfolio of your applications or your platforms, what ever you can. >> So yeah, the Google AI example >> Yeah, I mean, >> Or the Microsoft collaboration software example. I mean there's always or the M and A. >> Yeah, but- >> You're going to get to run Windows, you can run Windows on Amazon, so. >> By the way, Supercloud doesn't mean that you cannot do that. So the perfect example is say that you're using Azure because you have a SQL server intensive workload. >> Yep >> And you're using Google for ML, great. If you are using some differentiated feature of this cloud, you'll have to go somewhere and configure this widget, but what you can abstract with the Supercloud is the lifecycle manage of the service that runs on top, right? So how does the service get deployed, right? How do you monitor performance? How do you lifecycle it? How you secure it that you can abstract and that's the value and eventually value will win. So the customers will find what is the values, obstructing in making it uniform or going deeper? >> How about identity? Like take identity for instance, you know, that's an opportunity to abstract. Whether I use Microsoft Identity or Okta, and I can abstract that. >> Yeah, and then we have APIs and standards that we can use so eventually I think where there is enough pain, the right open source will emerge to solve that problem. >> Dave: Yeah, I can use abstract things like object store, right? That's pretty simple. >> But back to the engineering question though, is that developers, developers, developers, one thing about developers psychology is if something's not right, they say, "Go get fixing. I'm not touching it until you fix it." They're very sticky about, if something's not working, they're not going to do it again, right? So you got to get it right for developers. I mean, they'll maybe tolerate something new, but is the "juice worth the squeeze" as they say, right? So you can't go to direct say, "Hey, it's, what's a work in progress? We're going to get our infrastructure together and the world's going to be great for you, but just hang tight." They're going to be like, "Get your shit together then talk to me." So I think that to me is the question. It's an Ops question, but where's that value for the developer in Supercloud where the capabilities are there, there's less friction, it's simpler, it solves the complexity problem. I don't need these high skilled labor to manage Amazon. I got services exposed. >> That's what we talked about earlier. It's like the Walmart example. They basically, they took away from the developer the need to spin up infrastructure and worry about all the governance. I mean, it's not completely there yet. So the developer could focus on what he or she wanted to do. >> But there's a big, like in our industry, there's a big sort of flaw or the contention between developers and operators. Developers want to be on the cutting edge, right? And operators want to be on the stability, you know, like we want governance. >> Yeah, totally. >> Right, so they want to control, developers are like these little bratty kids, right? And they want Legos, like they want toys, right? Some of them want toys by way. They want Legos, they want to build there and they want make a mess out of it. So you got to make sure. My number one advice in this context is that do it up your application portfolio and, or your platform portfolio if you are an ISV, right? So if you are ISV you most probably, you're building a platform these days, do it up in a way that you can say this portion of our applications and our platform will adhere to what you are saying, standardization, you know, like Kubernetes, like slam dunk, you know, it works across clouds and in your data center hybrid, you know, whole nine yards, but there is some subset on the next door systems of innovation. Everybody has, it doesn't matter if you're DMV of Kansas or you are, you know, metaverse, right? Or Meta company, right, which is Facebook, they have it, they are building something new. For that, give them some freedom to choose different things like play with non-standard things. So that is the mantra for moving forward, for any enterprise. >> Do you think developers are happy with the infrastructure now or are they wanting people to get their act together? I mean, what's your reaction, or you think. >> Developers are happy as long as they can do their stuff, which is running code. They want to write code and innovate. So to me, when Ballmer said, "Developer, develop, Developer, what he meant was, all you other people get your act together so these developers can do their thing, and to me the Supercloud is the way for IT to get there and let developer be creative and go fast. Why not, without getting in trouble. >> Okay, let's wrap up this segment with a super clip. Okay, we're going to do a sound bite that we're going to make into a short video for each of you >> All right >> On you guys summarizing why Supercloud's important, why this next wave is relevant for the practitioners, for the industry and we'll turn this into an Instagram reel, YouTube short. So we'll call it a "Super clip. >> Alright, >> Sarbjeet, you want, you want some time to think about it? You want to go first? Vittorio, you want. >> I just didn't mind. (all laughing) >> No, okay, okay. >> I'll do it again. >> Go back. No, we got a fresh one. We'll going to already got that one in the can. >> I'll go. >> Sarbjeet, you go first. >> I'll go >> What's your super clip? >> In software systems, abstraction is your friend. I always say that. Abstraction is your friend, even if you're super professional developer, abstraction is your friend. We saw from the MFC library from C++ days till today. Abstract, use abstraction. Do not try to reinvent what's already being invented. Leverage cloud, leverage the platform side of the cloud. Not just infrastructure service, but platform as a service side of the cloud as well, and Supercloud is a meta platform built on top of these infrastructure services from three or four or five cloud providers. So use that and embrace the programmability, embrace the abstraction layer. That's the key actually, and developers who are true developers or professional developers as you said, they know that. >> Awesome. Great super clip. Vittorio, another shot at the plate here for super clip. Go. >> Multicloud is awesome. There's a reason why multicloud happened, is because gave our developers the ability to innovate fast and ever before. So if you are embarking on a digital transformation journey, which I call a survival journey, if you're not innovating and transforming, you're not going to be around in business three, five years from now. You have to adopt the Supercloud so the developer can be developer and keep building great, innovating digital experiences for your customers and IT can get in front of it and not get in trouble together. >> Building those super apps with Supercloud. That was a great super clip. Vittorio, thank you for sharing. >> Thanks guys. >> Sarbjeet, thanks for coming on talking about the developer impact Supercloud 2. On our next segment, coming up right now, we're going to hear from Walmart enterprise architect, how they are building and they are continuing to innovate, to build their own Supercloud. Really informative, instructive from a practitioner doing it in real time. Be right back with Walmart here in Palo Alto. Thanks for watching. (gentle music)

>> From theCUBE Studios in Palo Alto in Boston, bringing you data-driven insights from theCUBE and ETR. This is Breaking Analysis with Dave Vellante. >> OpenAI The company, and ChatGPT have taken the world by storm. Microsoft reportedly is investing an additional 10 billion dollars into the company. But in our view, while the hype around ChatGPT is justified, we don't believe OpenAI will lock up the market with its first mover advantage. Rather, we believe that success in this market will be directly proportional to the quality and quantity of data that a technology company has at its disposal, and the compute power that it could deploy to run its system. Hello and welcome to this week's Wikibon CUBE insights, powered by ETR. In this Breaking Analysis, we unpack the excitement around ChatGPT, and debate the premise that the company's early entry into the space may not confer winner take all advantage to OpenAI. And to do so, we welcome CUBE collaborator, alum, Sarbjeet Johal, (chuckles) and John Furrier, co-host of the Cube. Great to see you Sarbjeet, John. Really appreciate you guys coming to the program. >> Great to be on. >> Okay, so what is ChatGPT? Well, actually we asked ChatGPT, what is ChatGPT? So here's what it said. ChatGPT is a state-of-the-art language model developed by OpenAI that can generate human-like text. It could be fine tuned for a variety of language tasks, such as conversation, summarization, and language translation. So I asked it, give it to me in 50 words or less. How did it do? Anything to add? >> Yeah, think it did good. It's large language model, like previous models, but it started applying the transformers sort of mechanism to focus on what prompt you have given it to itself. And then also the what answer it gave you in the first, sort of, one sentence or two sentences, and then introspect on itself, like what I have already said to you. And so just work on that. So it it's self sort of focus if you will. It does, the transformers help the large language models to do that. >> So to your point, it's a large language model, and GPT stands for generative pre-trained transformer. >> And if you put the definition back up there again, if you put it back up on the screen, let's see it back up. Okay, it actually missed the large, word large. So one of the problems with ChatGPT, it's not always accurate. It's actually a large language model, and it says state of the art language model. And if you look at Google, Google has dominated AI for many times and they're well known as being the best at this. And apparently Google has their own large language model, LLM, in play and have been holding it back to release because of backlash on the accuracy. Like just in that example you showed is a great point. They got almost right, but they missed the key word. >> You know what's funny about that John, is I had previously asked it in my prompt to give me it in less than a hundred words, and it was too long, I said I was too long for Breaking Analysis, and there it went into the fact that it's a large language model. So it largely, it gave me a really different answer the, for both times. So, but it's still pretty amazing for those of you who haven't played with it yet. And one of the best examples that I saw was Ben Charrington from This Week In ML AI podcast. And I stumbled on this thanks to Brian Gracely, who was listening to one of his Cloudcasts. Basically what Ben did is he took, he prompted ChatGPT to interview ChatGPT, and he simply gave the system the prompts, and then he ran the questions and answers into this avatar builder and sped it up 2X so it didn't sound like a machine. And voila, it was amazing. So John is ChatGPT going to take over as a cube host? >> Well, I was thinking, we get the questions in advance sometimes from PR people. We should actually just plug it in ChatGPT, add it to our notes, and saying, "Is this good enough for you? Let's ask the real question." So I think, you know, I think there's a lot of heavy lifting that gets done. I think the ChatGPT is a phenomenal revolution. I think it highlights the use case. Like that example we showed earlier. It gets most of it right. So it's directionally correct and it feels like it's an answer, but it's not a hundred percent accurate. And I think that's where people are seeing value in it. Writing marketing, copy, brainstorming, guest list, gift list for somebody. Write me some lyrics to a song. Give me a thesis about healthcare policy in the United States. It'll do a bang up job, and then you got to go in and you can massage it. So we're going to do three quarters of the work. That's why plagiarism and schools are kind of freaking out. And that's why Microsoft put 10 billion in, because why wouldn't this be a feature of Word, or the OS to help it do stuff on behalf of the user. So linguistically it's a beautiful thing. You can input a string and get a good answer. It's not a search result. >> And we're going to get your take on on Microsoft and, but it kind of levels the playing- but ChatGPT writes better than I do, Sarbjeet, and I know you have some good examples too. You mentioned the Reed Hastings example. >> Yeah, I was listening to Reed Hastings fireside chat with ChatGPT, and the answers were coming as sort of voice, in the voice format. And it was amazing what, he was having very sort of philosophy kind of talk with the ChatGPT, the longer sentences, like he was going on, like, just like we are talking, he was talking for like almost two minutes and then ChatGPT was answering. It was not one sentence question, and then a lot of answers from ChatGPT and yeah, you're right. I, this is our ability. I've been thinking deep about this since yesterday, we talked about, like, we want to do this segment. The data is fed into the data model. It can be the current data as well, but I think that, like, models like ChatGPT, other companies will have those too. They can, they're democratizing the intelligence, but they're not creating intelligence yet, definitely yet I can say that. They will give you all the finite answers. Like, okay, how do you do this for loop in Java, versus, you know, C sharp, and as a programmer you can do that, in, but they can't tell you that, how to write a new algorithm or write a new search algorithm for you. They cannot create a secretive code for you to- >> Not yet. >> Have competitive advantage. >> Not yet, not yet. >> but you- >> Can Google do that today? >> No one really can. The reasoning side of the data is, we talked about at our Supercloud event, with Zhamak Dehghani who's was CEO of, now of Nextdata. This next wave of data intelligence is going to come from entrepreneurs that are probably cross discipline, computer science and some other discipline. But they're going to be new things, for example, data, metadata, and data. It's hard to do reasoning like a human being, so that needs more data to train itself. So I think the first gen of this training module for the large language model they have is a corpus of text. Lot of that's why blog posts are, but the facts are wrong and sometimes out of context, because that contextual reasoning takes time, it takes intelligence. So machines need to become intelligent, and so therefore they need to be trained. So you're going to start to see, I think, a lot of acceleration on training the data sets. And again, it's only as good as the data you can get. And again, proprietary data sets will be a huge winner. Anyone who's got a large corpus of content, proprietary content like theCUBE or SiliconANGLE as a publisher will benefit from this. Large FinTech companies, anyone with large proprietary data will probably be a big winner on this generative AI wave, because it just, it will eat that up, and turn that back into something better. So I think there's going to be a lot of interesting things to look at here. And certainly productivity's going to be off the charts for vanilla and the internet is going to get swarmed with vanilla content. So if you're in the content business, and you're an original content producer of any kind, you're going to be not vanilla, so you're going to be better. So I think there's so much at play Dave (indistinct). >> I think the playing field has been risen, so we- >> Risen and leveled? >> Yeah, and leveled to certain extent. So it's now like that few people as consumers, as consumers of AI, we will have a advantage and others cannot have that advantage. So it will be democratized. That's, I'm sure about that. But if you take the example of calculator, when the calculator came in, and a lot of people are, "Oh, people can't do math anymore because calculator is there." right? So it's a similar sort of moment, just like a calculator for the next level. But, again- >> I see it more like open source, Sarbjeet, because like if you think about what ChatGPT's doing, you do a query and it comes from somewhere the value of a post from ChatGPT is just a reuse of AI. The original content accent will be come from a human. So if I lay out a paragraph from ChatGPT, did some heavy lifting on some facts, I check the facts, save me about maybe- >> Yeah, it's productive. >> An hour writing, and then I write a killer two, three sentences of, like, sharp original thinking or critical analysis. I then took that body of work, open source content, and then laid something on top of it. >> And Sarbjeet's example is a good one, because like if the calculator kids don't do math as well anymore, the slide rule, remember we had slide rules as kids, remember we first started using Waze, you know, we were this minority and you had an advantage over other drivers. Now Waze is like, you know, social traffic, you know, navigation, everybody had, you know- >> All the back roads are crowded. >> They're car crowded. (group laughs) Exactly. All right, let's, let's move on. What about this notion that futurist Ray Amara put forth and really Amara's Law that we're showing here, it's, the law is we, you know, "We tend to overestimate the effect of technology in the short run and underestimate it in the long run." Is that the case, do you think, with ChatGPT? What do you think Sarbjeet? >> I think that's true actually. There's a lot of, >> We don't debate this. >> There's a lot of awe, like when people see the results from ChatGPT, they say what, what the heck? Like, it can do this? But then if you use it more and more and more, and I ask the set of similar question, not the same question, and it gives you like same answer. It's like reading from the same bucket of text in, the interior read (indistinct) where the ChatGPT, you will see that in some couple of segments. It's very, it sounds so boring that the ChatGPT is coming out the same two sentences every time. So it is kind of good, but it's not as good as people think it is right now. But we will have, go through this, you know, hype sort of cycle and get realistic with it. And then in the long term, I think it's a great thing in the short term, it's not something which will (indistinct) >> What's your counter point? You're saying it's not. >> I, no I think the question was, it's hyped up in the short term and not it's underestimated long term. That's what I think what he said, quote. >> Yes, yeah. That's what he said. >> Okay, I think that's wrong with this, because this is a unique, ChatGPT is a unique kind of impact and it's very generational. People have been comparing it, I have been comparing to the internet, like the web, web browser Mosaic and Netscape, right, Navigator. I mean, I clearly still remember the days seeing Navigator for the first time, wow. And there weren't not many sites you could go to, everyone typed in, you know, cars.com, you know. >> That (indistinct) wasn't that overestimated, the overhyped at the beginning and underestimated. >> No, it was, it was underestimated long run, people thought. >> But that Amara's law. >> That's what is. >> No, they said overestimated? >> Overestimated near term underestimated- overhyped near term, underestimated long term. I got, right I mean? >> Well, I, yeah okay, so I would then agree, okay then- >> We were off the charts about the internet in the early days, and it actually exceeded our expectations. >> Well there were people who were, like, poo-pooing it early on. So when the browser came out, people were like, "Oh, the web's a toy for kids." I mean, in 1995 the web was a joke, right? So '96, you had online populations growing, so you had structural changes going on around the browser, internet population. And then that replaced other things, direct mail, other business activities that were once analog then went to the web, kind of read only as you, as we always talk about. So I think that's a moment where the hype long term, the smart money, and the smart industry experts all get the long term. And in this case, there's more poo-pooing in the short term. "Ah, it's not a big deal, it's just AI." I've heard many people poo-pooing ChatGPT, and a lot of smart people saying, "No this is next gen, this is different and it's only going to get better." So I think people are estimating a big long game on this one. >> So you're saying it's bifurcated. There's those who say- >> Yes. >> Okay, all right, let's get to the heart of the premise, and possibly the debate for today's episode. Will OpenAI's early entry into the market confer sustainable competitive advantage for the company. And if you look at the history of tech, the technology industry, it's kind of littered with first mover failures. Altair, IBM, Tandy, Commodore, they and Apple even, they were really early in the PC game. They took a backseat to Dell who came in the scene years later with a better business model. Netscape, you were just talking about, was all the rage in Silicon Valley, with the first browser, drove up all the housing prices out here. AltaVista was the first search engine to really, you know, index full text. >> Owned by Dell, I mean DEC. >> Owned by Digital. >> Yeah, Digital Equipment >> Compaq bought it. And of course as an aside, Digital, they wanted to showcase their hardware, right? Their super computer stuff. And then so Friendster and MySpace, they came before Facebook. The iPhone certainly wasn't the first mobile device. So lots of failed examples, but there are some recent successes like AWS and cloud. >> You could say smartphone. So I mean. >> Well I know, and you can, we can parse this so we'll debate it. Now Twitter, you could argue, had first mover advantage. You kind of gave me that one John. Bitcoin and crypto clearly had first mover advantage, and sustaining that. Guys, will OpenAI make it to the list on the right with ChatGPT, what do you think? >> I think categorically as a company, it probably won't, but as a category, I think what they're doing will, so OpenAI as a company, they get funding, there's power dynamics involved. Microsoft put a billion dollars in early on, then they just pony it up. Now they're reporting 10 billion more. So, like, if the browsers, Microsoft had competitive advantage over Netscape, and used monopoly power, and convicted by the Department of Justice for killing Netscape with their monopoly, Netscape should have had won that battle, but Microsoft killed it. In this case, Microsoft's not killing it, they're buying into it. So I think the embrace extend Microsoft power here makes OpenAI vulnerable for that one vendor solution. So the AI as a company might not make the list, but the category of what this is, large language model AI, is probably will be on the right hand side. >> Okay, we're going to come back to the government intervention and maybe do some comparisons, but what are your thoughts on this premise here? That, it will basically set- put forth the premise that it, that ChatGPT, its early entry into the market will not confer competitive advantage to >> For OpenAI. >> To Open- Yeah, do you agree with that? >> I agree with that actually. It, because Google has been at it, and they have been holding back, as John said because of the scrutiny from the Fed, right, so- >> And privacy too. >> And the privacy and the accuracy as well. But I think Sam Altman and the company on those guys, right? They have put this in a hasty way out there, you know, because it makes mistakes, and there are a lot of questions around the, sort of, where the content is coming from. You saw that as your example, it just stole the content, and without your permission, you know? >> Yeah. So as quick this aside- >> And it codes on people's behalf and the, those codes are wrong. So there's a lot of, sort of, false information it's putting out there. So it's a very vulnerable thing to do what Sam Altman- >> So even though it'll get better, others will compete. >> So look, just side note, a term which Reid Hoffman used a little bit. Like he said, it's experimental launch, like, you know, it's- >> It's pretty damn good. >> It is clever because according to Sam- >> It's more than clever. It's good. >> It's awesome, if you haven't used it. I mean you write- you read what it writes and you go, "This thing writes so well, it writes so much better than you." >> The human emotion drives that too. I think that's a big thing. But- >> I Want to add one more- >> Make your last point. >> Last one. Okay. So, but he's still holding back. He's conducting quite a few interviews. If you want to get the gist of it, there's an interview with StrictlyVC interview from yesterday with Sam Altman. Listen to that one it's an eye opening what they want- where they want to take it. But my last one I want to make it on this point is that Satya Nadella yesterday did an interview with Wall Street Journal. I think he was doing- >> You were not impressed. >> I was not impressed because he was pushing it too much. So Sam Altman's holding back so there's less backlash. >> Got 10 billion reasons to push. >> I think he's almost- >> Microsoft just laid off 10000 people. Hey ChatGPT, find me a job. You know like. (group laughs) >> He's overselling it to an extent that I think it will backfire on Microsoft. And he's over promising a lot of stuff right now, I think. I don't know why he's very jittery about all these things. And he did the same thing during Ignite as well. So he said, "Oh, this AI will write code for you and this and that." Like you called him out- >> The hyperbole- >> During your- >> from Satya Nadella, he's got a lot of hyperbole. (group talks over each other) >> All right, Let's, go ahead. >> Well, can I weigh in on the whole- >> Yeah, sure. >> Microsoft thing on whether OpenAI, here's the take on this. I think it's more like the browser moment to me, because I could relate to that experience with ChatG, personally, emotionally, when I saw that, and I remember vividly- >> You mean that aha moment (indistinct). >> Like this is obviously the future. Anything else in the old world is dead, website's going to be everywhere. It was just instant dot connection for me. And a lot of other smart people who saw this. Lot of people by the way, didn't see it. Someone said the web's a toy. At the company I was worked for at the time, Hewlett Packard, they like, they could have been in, they had invented HTML, and so like all this stuff was, like, they just passed, the web was just being passed over. But at that time, the browser got better, more websites came on board. So the structural advantage there was online web usage was growing, online user population. So that was growing exponentially with the rise of the Netscape browser. So OpenAI could stay on the right side of your list as durable, if they leverage the category that they're creating, can get the scale. And if they can get the scale, just like Twitter, that failed so many times that they still hung around. So it was a product that was always successful, right? So I mean, it should have- >> You're right, it was terrible, we kept coming back. >> The fail whale, but it still grew. So OpenAI has that moment. They could do it if Microsoft doesn't meddle too much with too much power as a vendor. They could be the Netscape Navigator, without the anti-competitive behavior of somebody else. So to me, they have the pole position. So they have an opportunity. So if not, if they don't execute, then there's opportunity. There's not a lot of barriers to entry, vis-a-vis say the CapEx of say a cloud company like AWS. You can't replicate that, Many have tried, but I think you can replicate OpenAI. >> And we're going to talk about that. Okay, so real quick, I want to bring in some ETR data. This isn't an ETR heavy segment, only because this so new, you know, they haven't coverage yet, but they do cover AI. So basically what we're seeing here is a slide on the vertical axis's net score, which is a measure of spending momentum, and in the horizontal axis's is presence in the dataset. Think of it as, like, market presence. And in the insert right there, you can see how the dots are plotted, the two columns. And so, but the key point here that we want to make, there's a bunch of companies on the left, is he like, you know, DataRobot and C3 AI and some others, but the big whales, Google, AWS, Microsoft, are really dominant in this market. So that's really the key takeaway that, can we- >> I notice IBM is way low. >> Yeah, IBM's low, and actually bring that back up and you, but then you see Oracle who actually is injecting. So I guess that's the other point is, you're not necessarily going to go buy AI, and you know, build your own AI, you're going to, it's going to be there and, it, Salesforce is going to embed it into its platform, the SaaS companies, and you're going to purchase AI. You're not necessarily going to build it. But some companies obviously are. >> I mean to quote IBM's general manager Rob Thomas, "You can't have AI with IA." information architecture and David Flynn- >> You can't Have AI without IA >> without, you can't have AI without IA. You can't have, if you have an Information Architecture, you then can power AI. Yesterday David Flynn, with Hammersmith, was on our Supercloud. He was pointing out that the relationship of storage, where you store things, also impacts the data and stressablity, and Zhamak from Nextdata, she was pointing out that same thing. So the data problem factors into all this too, Dave. >> So you got the big cloud and internet giants, they're all poised to go after this opportunity. Microsoft is investing up to 10 billion. Google's code red, which was, you know, the headline in the New York Times. Of course Apple is there and several alternatives in the market today. Guys like Chinchilla, Bloom, and there's a company Jasper and several others, and then Lena Khan looms large and the government's around the world, EU, US, China, all taking notice before the market really is coalesced around a single player. You know, John, you mentioned Netscape, they kind of really, the US government was way late to that game. It was kind of game over. And Netscape, I remember Barksdale was like, "Eh, we're going to be selling software in the enterprise anyway." and then, pshew, the company just dissipated. So, but it looks like the US government, especially with Lena Khan, they're changing the definition of antitrust and what the cause is to go after people, and they're really much more aggressive. It's only what, two years ago that (indistinct). >> Yeah, the problem I have with the federal oversight is this, they're always like late to the game, and they're slow to catch up. So in other words, they're working on stuff that should have been solved a year and a half, two years ago around some of the social networks hiding behind some of the rules around open web back in the days, and I think- >> But they're like 15 years late to that. >> Yeah, and now they got this new thing on top of it. So like, I just worry about them getting their fingers. >> But there's only two years, you know, OpenAI. >> No, but the thing (indistinct). >> No, they're still fighting other battles. But the problem with government is that they're going to label Big Tech as like a evil thing like Pharma, it's like smoke- >> You know Lena Khan wants to kill Big Tech, there's no question. >> So I think Big Tech is getting a very seriously bad rap. And I think anything that the government does that shades darkness on tech, is politically motivated in most cases. You can almost look at everything, and my 80 20 rule is in play here. 80% of the government activity around tech is bullshit, it's politically motivated, and the 20% is probably relevant, but off the mark and not organized. >> Well market forces have always been the determining factor of success. The governments, you know, have been pretty much failed. I mean you look at IBM's antitrust, that, what did that do? The market ultimately beat them. You look at Microsoft back in the day, right? Windows 95 was peaking, the government came in. But you know, like you said, they missed the web, right, and >> so they were hanging on- >> There's nobody in government >> to Windows. >> that actually knows- >> And so, you, I think you're right. It's market forces that are going to determine this. But Sarbjeet, what do you make of Microsoft's big bet here, you weren't impressed with with Nadella. How do you think, where are they going to apply it? Is this going to be a Hail Mary for Bing, or is it going to be applied elsewhere? What do you think. >> They are saying that they will, sort of, weave this into their products, office products, productivity and also to write code as well, developer productivity as well. That's a big play for them. But coming back to your antitrust sort of comments, right? I believe the, your comment was like, oh, fed was late 10 years or 15 years earlier, but now they're two years. But things are moving very fast now as compared to they used to move. >> So two years is like 10 Years. >> Yeah, two years is like 10 years. Just want to make that point. (Dave laughs) This thing is going like wildfire. Any new tech which comes in that I think they're going against distribution channels. Lina Khan has commented time and again that the marketplace model is that she wants to have some grip on. Cloud marketplaces are a kind of monopolistic kind of way. >> I don't, I don't see this, I don't see a Chat AI. >> You told me it's not Bing, you had an interesting comment. >> No, no. First of all, this is great from Microsoft. If you're Microsoft- >> Why? >> Because Microsoft doesn't have the AI chops that Google has, right? Google is got so much core competency on how they run their search, how they run their backends, their cloud, even though they don't get a lot of cloud market share in the enterprise, they got a kick ass cloud cause they needed one. >> Totally. >> They've invented SRE. I mean Google's development and engineering chops are off the scales, right? Amazon's got some good chops, but Google's got like 10 times more chops than AWS in my opinion. Cloud's a whole different story. Microsoft gets AI, they get a playbook, they get a product they can render into, the not only Bing, productivity software, helping people write papers, PowerPoint, also don't forget the cloud AI can super help. We had this conversation on our Supercloud event, where AI's going to do a lot of the heavy lifting around understanding observability and managing service meshes, to managing microservices, to turning on and off applications, and or maybe writing code in real time. So there's a plethora of use cases for Microsoft to deploy this. combined with their R and D budgets, they can then turbocharge more research, build on it. So I think this gives them a car in the game, Google may have pole position with AI, but this puts Microsoft right in the game, and they already have a lot of stuff going on. But this just, I mean everything gets lifted up. Security, cloud, productivity suite, everything. >> What's under the hood at Google, and why aren't they talking about it? I mean they got to be freaked out about this. No? Or do they have kind of a magic bullet? >> I think they have the, they have the chops definitely. Magic bullet, I don't know where they are, as compared to the ChatGPT 3 or 4 models. Like they, but if you look at the online sort of activity and the videos put out there from Google folks, Google technology folks, that's account you should look at if you are looking there, they have put all these distinctions what ChatGPT 3 has used, they have been talking about for a while as well. So it's not like it's a secret thing that you cannot replicate. As you said earlier, like in the beginning of this segment, that anybody who has more data and the capacity to process that data, which Google has both, I think they will win this. >> Obviously living in Palo Alto where the Google founders are, and Google's headquarters next town over we have- >> We're so close to them. We have inside information on some of the thinking and that hasn't been reported by any outlet yet. And that is, is that, from what I'm hearing from my sources, is Google has it, they don't want to release it for many reasons. One is it might screw up their search monopoly, one, two, they're worried about the accuracy, 'cause Google will get sued. 'Cause a lot of people are jamming on this ChatGPT as, "Oh it does everything for me." when it's clearly not a hundred percent accurate all the time. >> So Lina Kahn is looming, and so Google's like be careful. >> Yeah so Google's just like, this is the third, could be a third rail. >> But the first thing you said is a concern. >> Well no. >> The disruptive (indistinct) >> What they will do is do a Waymo kind of thing, where they spin out a separate company. >> They're doing that. >> The discussions happening, they're going to spin out the separate company and put it over there, and saying, "This is AI, got search over there, don't touch that search, 'cause that's where all the revenue is." (chuckles) >> So, okay, so that's how they deal with the Clay Christensen dilemma. What's the business model here? I mean it's not advertising, right? Is it to charge you for a query? What, how do you make money at this? >> It's a good question, I mean my thinking is, first of all, it's cool to type stuff in and see a paper get written, or write a blog post, or gimme a marketing slogan for this or that or write some code. I think the API side of the business will be critical. And I think Howie Xu, I know you're going to reference some of his comments yesterday on Supercloud, I think this brings a whole 'nother user interface into technology consumption. I think the business model, not yet clear, but it will probably be some sort of either API and developer environment or just a straight up free consumer product, with some sort of freemium backend thing for business. >> And he was saying too, it's natural language is the way in which you're going to interact with these systems. >> I think it's APIs, it's APIs, APIs, APIs, because these people who are cooking up these models, and it takes a lot of compute power to train these and to, for inference as well. Somebody did the analysis on the how many cents a Google search costs to Google, and how many cents the ChatGPT query costs. It's, you know, 100x or something on that. You can take a look at that. >> A 100x on which side? >> You're saying two orders of magnitude more expensive for ChatGPT >> Much more, yeah. >> Than for Google. >> It's very expensive. >> So Google's got the data, they got the infrastructure and they got, you're saying they got the cost (indistinct) >> No actually it's a simple query as well, but they are trying to put together the answers, and they're going through a lot more data versus index data already, you know. >> Let me clarify, you're saying that Google's version of ChatGPT is more efficient? >> No, I'm, I'm saying Google search results. >> Ah, search results. >> What are used to today, but cheaper. >> But that, does that, is that going to confer advantage to Google's large language (indistinct)? >> It will, because there were deep science (indistinct). >> Google, I don't think Google search is doing a large language model on their search, it's keyword search. You know, what's the weather in Santa Cruz? Or how, what's the weather going to be? Or you know, how do I find this? Now they have done a smart job of doing some things with those queries, auto complete, re direct navigation. But it's, it's not entity. It's not like, "Hey, what's Dave Vellante thinking this week in Breaking Analysis?" ChatGPT might get that, because it'll get your Breaking Analysis, it'll synthesize it. There'll be some, maybe some clips. It'll be like, you know, I mean. >> Well I got to tell you, I asked ChatGPT to, like, I said, I'm going to enter a transcript of a discussion I had with Nir Zuk, the CTO of Palo Alto Networks, And I want you to write a 750 word blog. I never input the transcript. It wrote a 750 word blog. It attributed quotes to him, and it just pulled a bunch of stuff that, and said, okay, here it is. It talked about Supercloud, it defined Supercloud. >> It's made, it makes you- >> Wow, But it was a big lie. It was fraudulent, but still, blew me away. >> Again, vanilla content and non accurate content. So we are going to see a surge of misinformation on steroids, but I call it the vanilla content. Wow, that's just so boring, (indistinct). >> There's so many dangers. >> Make your point, cause we got to, almost out of time. >> Okay, so the consumption, like how do you consume this thing. As humans, we are consuming it and we are, like, getting a nicely, like, surprisingly shocked, you know, wow, that's cool. It's going to increase productivity and all that stuff, right? And on the danger side as well, the bad actors can take hold of it and create fake content and we have the fake sort of intelligence, if you go out there. So that's one thing. The second thing is, we are as humans are consuming this as language. Like we read that, we listen to it, whatever format we consume that is, but the ultimate usage of that will be when the machines can take that output from likes of ChatGPT, and do actions based on that. The robots can work, the robot can paint your house, we were talking about, right? Right now we can't do that. >> Data apps. >> So the data has to be ingested by the machines. It has to be digestible by the machines. And the machines cannot digest unorganized data right now, we will get better on the ingestion side as well. So we are getting better. >> Data, reasoning, insights, and action. >> I like that mall, paint my house. >> So, okay- >> By the way, that means drones that'll come in. Spray painting your house. >> Hey, it wasn't too long ago that robots couldn't climb stairs, as I like to point out. Okay, and of course it's no surprise the venture capitalists are lining up to eat at the trough, as I'd like to say. Let's hear, you'd referenced this earlier, John, let's hear what AI expert Howie Xu said at the Supercloud event, about what it takes to clone ChatGPT. Please, play the clip. >> So one of the VCs actually asked me the other day, right? "Hey, how much money do I need to spend, invest to get a, you know, another shot to the openAI sort of the level." You know, I did a (indistinct) >> Line up. >> A hundred million dollar is the order of magnitude that I came up with, right? You know, not a billion, not 10 million, right? So a hundred- >> Guys a hundred million dollars, that's an astoundingly low figure. What do you make of it? >> I was in an interview with, I was interviewing, I think he said hundred million or so, but in the hundreds of millions, not a billion right? >> You were trying to get him up, you were like "Hundreds of millions." >> Well I think, I- >> He's like, eh, not 10, not a billion. >> Well first of all, Howie Xu's an expert machine learning. He's at Zscaler, he's a machine learning AI guy. But he comes from VMware, he's got his technology pedigrees really off the chart. Great friend of theCUBE and kind of like a CUBE analyst for us. And he's smart. He's right. I think the barriers to entry from a dollar standpoint are lower than say the CapEx required to compete with AWS. Clearly, the CapEx spending to build all the tech for the run a cloud. >> And you don't need a huge sales force. >> And in some case apps too, it's the same thing. But I think it's not that hard. >> But am I right about that? You don't need a huge sales force either. It's, what, you know >> If the product's good, it will sell, this is a new era. The better mouse trap will win. This is the new economics in software, right? So- >> Because you look at the amount of money Lacework, and Snyk, Snowflake, Databrooks. Look at the amount of money they've raised. I mean it's like a billion dollars before they get to IPO or more. 'Cause they need promotion, they need go to market. You don't need (indistinct) >> OpenAI's been working on this for multiple five years plus it's, hasn't, wasn't born yesterday. Took a lot of years to get going. And Sam is depositioning all the success, because he's trying to manage expectations, To your point Sarbjeet, earlier. It's like, yeah, he's trying to "Whoa, whoa, settle down everybody, (Dave laughs) it's not that great." because he doesn't want to fall into that, you know, hero and then get taken down, so. >> It may take a 100 million or 150 or 200 million to train the model. But to, for the inference to, yeah to for the inference machine, It will take a lot more, I believe. >> Give it, so imagine, >> Because- >> Go ahead, sorry. >> Go ahead. But because it consumes a lot more compute cycles and it's certain level of storage and everything, right, which they already have. So I think to compute is different. To frame the model is a different cost. But to run the business is different, because I think 100 million can go into just fighting the Fed. >> Well there's a flywheel too. >> Oh that's (indistinct) >> (indistinct) >> We are running the business, right? >> It's an interesting number, but it's also kind of, like, context to it. So here, a hundred million spend it, you get there, but you got to factor in the fact that the ways companies win these days is critical mass scale, hitting a flywheel. If they can keep that flywheel of the value that they got going on and get better, you can almost imagine a marketplace where, hey, we have proprietary data, we're SiliconANGLE in theCUBE. We have proprietary content, CUBE videos, transcripts. Well wouldn't it be great if someone in a marketplace could sell a module for us, right? We buy that, Amazon's thing and things like that. So if they can get a marketplace going where you can apply to data sets that may be proprietary, you can start to see this become bigger. And so I think the key barriers to entry is going to be success. I'll give you an example, Reddit. Reddit is successful and it's hard to copy, not because of the software. >> They built the moat. >> Because you can, buy Reddit open source software and try To compete. >> They built the moat with their community. >> Their community, their scale, their user expectation. Twitter, we referenced earlier, that thing should have gone under the first two years, but there was such a great emotional product. People would tolerate the fail whale. And then, you know, well that was a whole 'nother thing. >> Then a plane landed in (John laughs) the Hudson and it was over. >> I think verticals, a lot of verticals will build applications using these models like for lawyers, for doctors, for scientists, for content creators, for- >> So you'll have many hundreds of millions of dollars investments that are going to be seeping out. If, all right, we got to wrap, if you had to put odds on it that that OpenAI is going to be the leader, maybe not a winner take all leader, but like you look at like Amazon and cloud, they're not winner take all, these aren't necessarily winner take all markets. It's not necessarily a zero sum game, but let's call it winner take most. What odds would you give that open AI 10 years from now will be in that position. >> If I'm 0 to 10 kind of thing? >> Yeah, it's like horse race, 3 to 1, 2 to 1, even money, 10 to 1, 50 to 1. >> Maybe 2 to 1, >> 2 to 1, that's pretty low odds. That's basically saying they're the favorite, they're the front runner. Would you agree with that? >> I'd say 4 to 1. >> Yeah, I was going to say I'm like a 5 to 1, 7 to 1 type of person, 'cause I'm a skeptic with, you know, there's so much competition, but- >> I think they're definitely the leader. I mean you got to say, I mean. >> Oh there's no question. There's no question about it. >> The question is can they execute? >> They're not Friendster, is what you're saying. >> They're not Friendster and they're more like Twitter and Reddit where they have momentum. If they can execute on the product side, and if they don't stumble on that, they will continue to have the lead. >> If they say stay neutral, as Sam is, has been saying, that, hey, Microsoft is one of our partners, if you look at their company model, how they have structured the company, then they're going to pay back to the investors, like Microsoft is the biggest one, up to certain, like by certain number of years, they're going to pay back from all the money they make, and after that, they're going to give the money back to the public, to the, I don't know who they give it to, like non-profit or something. (indistinct) >> Okay, the odds are dropping. (group talks over each other) That's a good point though >> Actually they might have done that to fend off the criticism of this. But it's really interesting to see the model they have adopted. >> The wildcard in all this, My last word on this is that, if there's a developer shift in how developers and data can come together again, we have conferences around the future of data, Supercloud and meshs versus, you know, how the data world, coding with data, how that evolves will also dictate, 'cause a wild card could be a shift in the landscape around how developers are using either machine learning or AI like techniques to code into their apps, so. >> That's fantastic insight. I can't thank you enough for your time, on the heels of Supercloud 2, really appreciate it. All right, thanks to John and Sarbjeet for the outstanding conversation today. Special thanks to the Palo Alto studio team. My goodness, Anderson, this great backdrop. You guys got it all out here, I'm jealous. And Noah, really appreciate it, Chuck, Andrew Frick and Cameron, Andrew Frick switching, Cameron on the video lake, great job. And Alex Myerson, he's on production, manages the podcast for us, Ken Schiffman as well. Kristen Martin and Cheryl Knight help get the word out on social media and our newsletters. Rob Hof is our editor-in-chief over at SiliconANGLE, does some great editing, thanks to all. Remember, all these episodes are available as podcasts. All you got to do is search Breaking Analysis podcast, wherever you listen. Publish each week on wikibon.com and siliconangle.com. Want to get in touch, email me directly, david.vellante@siliconangle.com or DM me at dvellante, or comment on our LinkedIn post. And by all means, check out etr.ai. They got really great survey data in the enterprise tech business. This is Dave Vellante for theCUBE Insights powered by ETR. Thanks for watching, We'll see you next time on Breaking Analysis. (electronic music)

(bright upbeat music) >> Greetings, brilliant community and thank you so much for tuning in to theCUBE here for the last three days where we've been live from Detroit, Michigan. I've had the pleasure of spending this week with Lisa Martin and John Furrier. Thank you both so much for hanging out, for inviting me into the CUBE family. It's our first show together, it's been wonderful. >> Thank you. >> You nailed it. >> Oh thanks, sweetheart. >> Great job. Great job team, well done. Free wall to wall coverage, it's what we do. We stay till everyone else-- >> Savannah: 100 percent. >> Everyone else leaves, till they pull the plug. >> Lisa: Till they turn the lights out. We're still there. >> Literally. >> Literally last night. >> Still broadcasting. >> Whatever takes to get the stories and get 'em out there at scale. >> Yeah. >> Great time. >> 33. 33 different segments too. Very impressive. John, I'm curious, you're a trend watcher and you've been at every single KubeCon. >> Yep. >> What are the trends this year? Give us the breakdown. >> I think CNCF does this, it's a hard job to balance all the stakeholders. So one, congratulations to the CNCF for another great KubeCon and CloudNativeCon. It is really hard to balance bringing in the experts who, as time goes by, seven years we've been all of, as you said, you get experts, you get seniority, and people who can be mentors, 60% new people. You have vendors who are sponsoring and there's always people complaining and bitching and moaning. They want this, they want that. It's always hard and they always do a good job of balancing it. We're lucky that we get to scale the stories with CUBE and that's been great. We had some great stories here, but it's a great community and again, they're inclusive. As I've said before, we've talked about it. This year though is an inflection point in my opinion, because you're seeing the developer ecosystem growing so fast. It's global. You're seeing events pop up, you're seeing derivative events. CNCF is at the center point and they have to maintain the culture of developer experts, maintainers, while balancing the newbies. And that's going to be >> Savannah: Mm-hmm. really hard. And they've done a great job. We had a great conversation with them. So great job. And I think it's going to continue. I think the attendance metric is a little bit of a false positive. There's a lot of online people who didn't come to Detroit this year. And I think maybe the combination of the venue, the city, or just Covid preferences may not look good on paper, on the numbers 'cause it's not a major step up in attendance. It's still bigger, but the community, I think, is going to continue to grow. I'm bullish on it. >> Yeah, I mean at least we did see double the number of people that we had in Los Angeles. Very curious. I think Amsterdam, where we'll be next with CNCF in the spring, in April. I think that's actually going to be a better pulse check. We'll be in Europe, we'll see what's going on. >> John: Totally. >> I mean, who doesn't like Amsterdam in the springtime? Lisa, what have been some of your observations? >> Oh, so many observations. The evolution of the conference, the hallway track conversations really shifting towards adjusting to the enterprise. The enterprise momentum that we saw here as well. We had on the show, Ford. >> Savannah: Yes. We had MassMutual, we had ING, that was today. Home Depot is here. We are seeing all these big companies that we know and love, become software companies right before our eyes. >> Yeah. Well, and I think we forget that software powers our entire world. And so of course they're going to have to be here. So much running on Kubernetes. It's on-prem, it's at the edge, it's everywhere. It's exciting. Woo, I'm excited. John, what do you think is the number one story? This is your question. I love asking you this question. What is the number one story out KubeCon? >> Well, I think the top story is a combination of two things. One is the evolution of Cloud Native. We're starting to see web assembly. That's a big hyped up area. It got a lot of attention. >> Savannah: Yeah. That's kind of teething out the future. >> Savannah: Rightfully so. The future of this kind of lightweight. You got the heavy duty VMs, you got Kubernetes and containers, and now this web assembly, shows a trajectory of apps, server-like environment. And then the big story is security. Software supply chain is, to me, was the number one consistent theme. At almost all the interviews, in the containers, and the workflows, >> Savannah: Very hot. software supply chain is real. The CD Foundation mentioned >> Savannah: Mm-hmm. >> they had 16,000 vulnerabilities identified in their code base. They were going to automate that. So again, >> Savannah: That was wild. >> That's the top story. The growth of open source exposes potential vulnerabilities with security. So software supply chain gets my vote. >> Did you hear anything that surprised you? You guys did this great preview of what you thought we were going to hear and see and feel and touch at KubeCon, CloudNativeCon 2022. You talked about, for example, the, you know, healthcare financial services being early adopters of this. Anything surprise either one of you in terms of what you predicted versus what we saw? Savannah, let's start with you. >> You know what really surprised me, and this is ironic, so I'm a community gal by trade. But I was really just impressed by the energy that everyone brought here and the desire to help. The thing about the open source community that always strikes me is, I mean 187 different countries participating. You've got, I believe it's something like 175,000 people contributing to the 140 projects plus that CNCF is working on. But that culture of collaboration extends far beyond just the CNCF projects. Everyone here is keen to help each other. We had the conversation just before about the teaching and the learnings that are going on here. They brought in Detroit's students to come and learn, which is just the most heartwarming story out of this entire thing. And I think it's just the authenticity of everyone in this community and their passion. Even though I know it's here, it still surprises me to see it in the flesh. Especially in a place like Detroit. >> It's nice. >> Yeah. >> It's so nice to see it. And you bring up a good point. It's very authentic. >> Savannah: It's super authentic. >> I mean, what surprised me is one, the Wasm, or web assembly. I didn't see that coming at the scale of the conversation. It sucked a lot of options out of the room in my opinion, still hyped up. But this looks like it's got a good trajectory. I like that. The other thing that surprised me that was a learning was my interview with Solo.io, Idit, and Brian Gracely, because he's a CUBE alumni and former host of theCUBE, and analyst at Wikibon, was how their go-to-market was an example of a modern company in Covid with a clean sheet of paper and smart people, they're just doing things different. They're in Slack with their customers. And I walked away with, "Wow that's like a playbook that's not, was never, in the go-to-market VC-backed company playbook." I thought that was, for me, a personal walk away saying that's important. I like how they did that. And there's a lot of companies I think could learn from that. Especially as the recession comes where partnering with customers has always been a top priority. And how they did that was very clever, very effective, very efficient. So I walked away with that saying, "I think that's going to be a standard." So that was a pleasant surprise. >> That was a great surprise. Also, that's a female-founded company, which is obviously not super common. And the growth that they've experienced, to your point, really being catalyzed by Covid, is incredibly impressive. I mean they have some massive brand name customers, Amex, BMW for example. >> Savannah: Yeah. >> Great point. >> And I interviewed her years ago and I remember saying to myself, "Wow, she's impressive." I liked her. She's a player. A player for sure. And she's got confidence. Even on the interview she said, "We're just better, we have better product." And I just like the point of view. Very customer-focused but confident. And I just took, that's again, a great company. And again, I'm not surprised that Brian Gracely left Red Hat to go work there. So yeah, great, great call there. And of course other things that weren't surprising that I predicted, Red Hat continued to invest. They continue to bring people on theCUBE, they support theCUBE but more importantly they have a good strategy. They're in that multicloud positioning. They're going to have an opportunity to get a bite at the apple. And I what I call the supercloud. As enterprises try to go and be mainstream, Cloud Native, they're going to need some help. And Red Hat is always has the large enterprise customers. >> Savannah: What surprised you, Lisa? >> Oh my gosh, so many things. I think some of the memorable conversations that we had. I love talking with some of the enterprises that we mentioned, ING Bank for example. You know, or institutions that have been around for 100 plus years. >> Savannah: Oh, yeah. To see not only how much they've innovated and stayed relevant to meet the demands of the consumer, which are only increasing, but they're doing so while fostering a culture of innovation and a culture that allows these technology leaders to really grow within the organization. That was a really refreshing conversation that I think we had. 'Cause you can kind of >> Savannah: Absolutely. think about these old stodgy companies. Nah, of course they're going to digitize. >> Thinking about working for the bank, I think it's boring. >> Right? >> Yeah. And they were talking about, in fact, those great t-shirts that they had on, >> Yeah, yeah, yeah, yeah. were all about getting more people to understand how fun it is to work in tech for ING Bank in different industries. You don't just have to work for the big tech companies to be doing really cool stuff in technology. >> What I really liked about this show is we had two female hosts. >> Savannah: Yeah. >> How about that? Come on. >> Hey, well done, well done on your recruitment there, champ. >> Yes, thank you boss. (John laughs) >> And not to mention we have a really all-star production team. I do just want to give them a little shout out. To all the wonderful folks behind the lines here. (people clapping) >> John: Brendan. Good job. >> Yeah. Without Brendan, Anderson, Noah, and Andrew, we would be-- >> Of course Frank Faye holding it back there too. >> Yeah, >> Of course, Frank. >> I mean, without the business development wheels on the ship we'd really be in an unfortunate spot. I almost just swore on television. We're not going to do that. >> It's okay. No one's regulating. >> Yeah. (all laugh) >> Elon Musk just took over Twitter. >> It was a close call. >> That's right! >> It's going to be a hellscape. >> Yeah, I mean it's, shit's on fire. So we'll just see what happens next. I do, I really want to talk about this because I think it's really special. It's an ethos and some magic has happened here. Let's talk about Detroit. Let's talk about what it means to be here. We saw so many, and I can't stress this enough, but I think it really matters. There was a commitment to celebrating place here. Lisa, did you notice this too? >> Absolutely. And it surprised me because we just don't see that at conferences. >> Yeah. We're so used to going to the same places. >> Right. >> Vegas. Vegas, Vegas. More Vegas. >> Your tone-- >> San Francisco >> (both laugh) sums up my feelings. Yes. >> Right? >> Yeah. And, well, it's almost robotic but, and the fact that we're like, oh Detroit, really? But there was so much love for this city and recognizing and supporting its residents that we just don't see at conferences. You uncovered a lot of that with your swag-savvy segments, >> Savannah: Yeah. >> And you got more of that to talk about today. >> Don't worry, it's coming. Yeah. (laughs) >> What about you? Have you enjoyed Detroit? I know you hadn't been here in a long time, when we did our intro session. >> I think it's a bold move for the CNCF to come here and celebrate. What they did, from teaching the kids in the city some tech, they had a session. I thought that was good. >> Savannah: Loved that. I think it was a risky move because a lot of people, like, weren't sure if they were going to fly to Detroit. So some say it might impact the attendance. I thought they did a good job. Their theme, Road Ahead. Nice tie in. >> Savannah: Yeah. And so I think I enjoyed Detroit. The weather was great. It didn't rain. Nice breeze outside. >> Yeah. >> The weather was great, the restaurants are phenomenal. So Detroit's a good city. I missed some hockey games. I'd love to see the Red Wings play. Missed that game. But we always come back. >> I think it's really special. I mean, every time I talked to a company about their swag, that had sourced it locally, there was a real reason for this story. I mean even with Kasten in that last segment when I noticed that they had done Carhartt beanies, Carhartt being a Michigan company. They said, "I'm so glad you noticed. That's why we did it." And I think that type of, the community commitment to place, it all comes back to community. One of the bigger themes of the show. But that passion and that support, we need more of that. >> Lisa: Yeah. >> And the thing about the guests we've had this past three days have been phenomenal. We had a diverse set of companies, individuals come on theCUBE, you know, from Scott Johnston at Docker. A really one on one. We had a great intense conversation. >> Savannah: Great way to kick it off. >> We shared a lot of inside baseball, about Docker, super important company. You know, impressed with companies like Platform9 it's been around since the OpenStack days who are now in a relevant position. Rafi Systems, hot startup, they don't have a lot of resources, a lot of guerilla marketing going on. So I love to see the mix of startups really contributing. The big players are here. So it's a real great mix of companies. And I thought the interviews were phenomenal, like you said, Ford. We had, Kubia launched on theCUBE. >> Savannah: Yes. >> That's-- >> We snooped the location for KubeCon North America. >> You did? >> Chicago, everyone. In case you missed it, Bianca was nice enough to share that with us. >> We had Sarbjeet Johal, CUBE analyst came on, Keith Townsend, yesterday with you guys. >> We had like analyst speed dating last night. (all laugh) >> How'd that go? (laughs) >> It was actually great. One of the things that they-- >> Did they hug and kiss at the end? >> Here's the funny thing is that they were debating the size of the CNC app. One thinks it's too big, one thinks it's too small. And I thought, is John Goldilocks? (John laughs) >> Savannah: Yeah. >> What is John going to think about that? >> Well I loved that segment. I thought, 'cause Keith and Sarbjeet argue with each other on Twitter all the time. And I heard Keith say before, he went, "Yeah let's have it out on theCUBE." So that was fun to watch. >> Thank you for creating this forum for us to have that kind of discourse. >> Lisa: Yes, thank you. >> Well, it wouldn't be possible without the sponsors. Want to thank the CNCF. >> Absolutely. >> And all the ecosystem partners and sponsors that make theCUBE possible. We love doing this. We love getting the stories. No story's too small for theCUBE. We'll go with it. Do whatever it takes. And if it wasn't for the sponsors, the community wouldn't get all the great knowledge. So, and thank you guys. >> Hey. Yeah, we're, we're happy to be here. Speaking of sponsors and vendors, should we talk a little swag? >> Yeah. >> What do you guys think? All right. Okay. So now this is becoming a tradition on theCUBE so I'm very delighted, the savvy swag segment. I do think it's interesting though. I mean, it's not, this isn't just me shouting out folks and showing off t-shirts and socks. It's about standing out from the noise. There's a lot of players in this space. We got a lot of CNCF projects and one of the ways to catch the attention of people walking the show floor is to have interesting swag. So we looked for the most unique swag on Wednesday and I hadn't found this yet, but I do just want to bring it up. Oops, I think I might have just dropped it. This is cute. Is, most random swag of the entire show goes to this toothbrush. I don't really have more in terms of the pitch there because this is just random. (Lisa laughs) >> But so, everyone needs that. >> John: So what's their tagline? >> And you forget these. >> Yeah, so the idea was to brush your cloud bills. So I think they're reducing the cost of-- >> Kind of a hygiene angle. >> Yeah, yeah. Very much a hygiene angle, which I found a little ironic in this crowd to be completely honest with you. >> John: Don't leave the lights on theCUBE. That's what they say. >> Yeah. >> I mean we are theCUBE so it would be unjust of me not to show you a Rubik's cube. This is actually one of those speed cubes. I'm not going to be able to solve this for you with one hand on camera, but apparently someone did it in 17 seconds at the booth. Knowing this audience, not surprising to me at all. Today we are, and yesterday, was the t-shirt contest. Best t-shirt contest. Today we really dove into the socks. So this is, I noticed this trend at KubeCon in Los Angeles last year. Lots of different socks, clouds obviously a theme for the cloud. I'm just going to lay these out. Lots of gamers in the house. Not surprising. Here on this one. >> John: Level up. >> Got to level up. I love these 'cause they say, "It's not a bug." And anyone who's coded has obviously had to deal with that. We've got, so Star Wars is a huge theme here. There's Lego sets. >> John: I think it's Star Trek. But. >> That's Star Trek? >> John: That's okay. >> Could be both. (Lisa laughs) >> John: Nevermind, I don't want to. >> You can flex your nerd and geek with us anytime you want, John. I don't mind getting corrected. I'm all about, I'm all about the truth. >> Star Trek. Star Wars. Okay, we're all the same. Okay, go ahead. >> Yeah, no, no, this is great. Slim.ai was nice enough to host us for dinner on Tuesday night. These are their lovely cloud socks. You can see Cloud Native, obviously Cloud Native Foundation, cloud socks, whole theme here. But if we're going to narrow it down to some champions, I love these little bee elephants from Raft. And when I went up to these guys, I actually probably would've called these my personal winner. They said, again, so community focused and humble here at CNCF, they said that Wiz was actually the champion according to the community. These unicorn socks are pretty excellent. And I have to say the branding is flawless. So we'll go ahead and give Wiz the win on the best sock contest. >> John: For the win. >> Yeah, Wiz for the win. However, the thing that I am probably going to use the most is this really dope Detroit snapback from Kasten. So I'm going to be rocking this from now on for the rest of the segment as well. And I feel great about this snapback. >> Looks great. Looks good on you. >> Yeah. >> Thanks John. (John laughs) >> So what are we expecting between now and KubeCon in Amsterdam? >> Well, I think it's going to be great to see how they, the European side, it's a chill show. It's great. Brings in the European audience from the global perspective. I always love the EU shows because one, it's a great destination. Amsterdam's going to be a great location. >> Savannah: I'm pumped. >> The American crowd loves going over there. All the event cities that they choose are always awesome. I missed Valencia cause I got Covid. I'm really bummed about that. But I love the European shows. It's just a little bit, it's high intensity, but it's the European chill. They got a little bit more of that siesta vibe going on. >> Yeah. >> And it's just awesome. >> Yeah, >> And I think that the mojo that carried throughout this week, it's really challenging to not only have a show that's five days, >> but to go through all week, >> Savannah: Seriously. >> to a Friday at 4:00 PM Eastern Time, and still have the people here, the energy and all the collaboration. >> Savannah: Yeah. >> The conversations that are still happening. I think we're going to see a lot more innovation come spring 2023. >> Savannah: Mm-hmm. >> Yeah. >> So should we do a bet, somebody's got to buy dinner? Who, well, I guess the folks who lose this will buy dinner for the other one. How many attendees do you think we'll see in Amsterdam? So we had 4,000, >> Oh, I'm going to lose this one. >> roughly in Los Angeles. Priyanka was nice enough to share with us, there was 8,000 here in Detroit. And I'm talking in person, we're not going to meddle this with the online. >> 6500. >> Lisa: I was going to say six, six K. >> I'm going 12,000. >> Ooh! >> I'm going to go ahead and go big I'm going to go opposite Price Is Right. >> One dollar. >> Yeah. (all laugh) That's exactly where I was driving with it. I'm going, I'm going absolutely all in. I think the momentum here is building. I think if we look at the numbers from-- >> John: You could go Family Feud >> Yeah, yeah, exactly. And they mentioned that they had 11,000 people who have taken their Kubernetes course in that first year. If that's a benchmark and an indicator, we've got the veteran players here. But I do think that, I personally think that the hype of Kubernetes has actually preceded adoption. If you look at the data and now we're finally tipping over. I think the last two years we were on the fringe and right now we're there. It's great. (voice blares loudly on loudspeaker) >> Well, on that note (all laugh) On that note, actually, on that note, as we are talking, so I got to give cred to my cohosts. We deal with a lot of background noise here on theCUBE. It is a live show floor. There's literally someone on an e-scooter behind me. There's been Pong going on in the background. The sound will haunt the three of us for the rest of our lives, as well as the production crew. (Lisa laughs) And, and just as we're sitting here doing this segment last night, they turned the lights off on us, today they're letting everyone know that the event is over. So on that note, I just want to say, Lisa, thank you so much. Such a warm welcome to the team. >> Thank you. >> John, what would we do without you? >> You did an amazing job. First CUBE, three days. It's a big show. You got staying power, I got to say. >> Lisa: Absolutely. >> Look at that. Not bad. >> You said it on camera now. >> Not bad. >> So you all are stuck with me. (all laugh) >> A plus. Great job to the team. Again, we do so much flow here. Brandon, Team, Andrew, Noah, Anderson, Frank. >> They're doing our hair, they're touching up makeup. They're helping me clean my teeth, staying hydrated. >> We look good because of you. >> And the guests. Thanks for coming on and spending time with us. And of course the sponsors, again, we can't do it without the sponsors. If you're watching this and you're a sponsor, support theCUBE, it helps people get what they need. And also we're do a lot more segments around community and a lot more educational stuff. >> Savannah: Yeah. So we're going to do a lot more in the EU and beyond. So thank you. >> Yeah, thank you. And thank you to everyone. Thank you to the community, thank you to theCUBE community and thank you for tuning in, making it possible for us to have somebody to talk to on the other side of the camera. My name is Savannah Peterson for the last time in Detroit, Michigan. Thanks for tuning into theCUBE. >> Okay, we're done. (bright upbeat music)

>> From theCUBE Studios in Palo Alto and Boston, bringing you data-driven insights from theCUBE and ETR, this is Breaking Analysis with Dave Vellante. >> This past week we saw two of the Big 3 cloud providers present the latest update on their respective cloud visions, their business progress, their announcements and innovations. The content at these events had many overlapping themes, including modern cloud infrastructure at global scale, applying advanced machine intelligence, AKA AI, end-to-end data platforms, collaboration software. They talked a lot about the future of work automation. And they gave us a little taste, each company of the Metaverse Web 3.0 and much more. Despite these striking similarities, the differences between these two cloud platforms and that of AWS remains significant. With Microsoft leveraging its massive application software footprint to dominate virtually all markets and Google doing everything in its power to keep up with the frenetic pace of today's cloud innovation, which was set into motion a decade and a half ago by AWS. Hello and welcome to this week's Wikibon CUBE Insights, powered by ETR. In this Breaking Analysis, we unpack the immense amount of content presented by the CEOs of Microsoft and Google Cloud at Microsoft Ignite and Google Cloud Next. We'll also quantify with ETR survey data the relative position of these two cloud giants in four key sectors: cloud IaaS, BI analytics, data platforms and collaboration software. Now one thing was clear this past week, hybrid events are the thing. Google Cloud Next took place live over a 24-hour period in six cities around the world, with the main gathering in New York City. Microsoft Ignite, which normally is attended by 30,000 people, had a smaller event in Seattle, in person with a virtual audience around the world. AWS re:Invent, of course, is much different. Yes, there's a virtual component at re:Invent, but it's all about a big live audience gathering the week after Thanksgiving, in the first week of December in Las Vegas. Regardless, Satya Nadella keynote address was prerecorded. It was highly produced and substantive. It was visionary, energetic with a strong message that Azure was a platform to allow customers to build their digital businesses. Doing more with less, which was a key theme of his. Nadella covered a lot of ground, starting with infrastructure from the compute, highlighting a collaboration with Arm-based, Ampere processors. New block storage, 60 regions, 175,000 miles of fiber cables around the world. He presented a meaningful multi-cloud message with Azure Arc to support on-prem and edge workloads, as well as of course the public cloud. And talked about confidential computing at the infrastructure level, a theme we hear from all cloud vendors. He then went deeper into the end-to-end data platform that Microsoft is building from the core data stores to analytics, to governance and the myriad tooling Microsoft offers. AI was next with a big focus on automation, AI, training models. He showed demos of machines coding and fixing code and machines automatically creating designs for creative workers and how Power Automate, Microsoft's RPA tooling, would combine with Microsoft Syntex to understand documents and provide standard ways for organizations to communicate with those documents. There was of course a big focus on Azure as developer cloud platform with GitHub Copilot as a linchpin using AI to assist coders in low-code and no-code innovations that are coming down the pipe. And another giant theme was a workforce transformation and how Microsoft is using its heritage and collaboration and productivity software to move beyond what Nadella called productivity paranoia, i.e., are remote workers doing their jobs? In a world where collaboration is built into intelligent workflows, and he even showed a glimpse of the future with AI-powered avatars and partnerships with Meta and Cisco with Teams of all firms. And finally, security with a bevy of tools from identity, endpoint, governance, et cetera, stressing a suite of tools from a single provider, i.e., Microsoft. So a couple points here. One, Microsoft is following in the footsteps of AWS with silicon advancements and didn't really emphasize that trend much except for the Ampere announcement. But it's building out cloud infrastructure at a massive scale, there is no debate about that. Its plan on data is to try and provide a somewhat more abstracted and simplified solutions, which differs a little bit from AWS's approach of the right database tool, for example, for the right job. Microsoft's automation play appears to provide simple individual productivity tools, kind of a ground up approach and make it really easy for users to drive these bottoms up initiatives. We heard from UiPath that forward five last month, a little bit of a different approach of horizontal automation, end-to-end across platforms. So quite a different play there. Microsoft's angle on workforce transformation is visionary and will continue to solidify in our view its dominant position with Teams and Microsoft 365, and it will drive cloud infrastructure consumption by default. On security as well as a cloud player, it has to have world-class security, and Azure does. There's not a lot of debate about that, but the knock on Microsoft is Patch Tuesday becomes Hack Wednesday because Microsoft releases so many patches, it's got so much Swiss cheese in its legacy estate and patching frequently, it becomes a roadmap and a trigger for hackers. Hey, patch Tuesday, these are all the exploits that you can go after so you can act before the patches are implemented. And so it's really become a problem for users. As well Microsoft is competing with many of the best-of-breed platforms like CrowdStrike and Okta, which have market momentum and appear to be more attractive horizontal plays for customers outside of just the Microsoft cloud. But again, it's Microsoft. They make it easy and very inexpensive to adopt. Now, despite the outstanding presentation by Satya Nadella, there are a couple of statements that should raise eyebrows. Here are two of them. First, as he said, Azure is the only cloud that supports all organizations and all workloads from enterprises to startups, to highly regulated industries. I had a conversation with Sarbjeet Johal about this, to make sure I wasn't just missing something and we were both surprised, somewhat, by this claim. I mean most certainly AWS supports more certifications for example, and we would think it has a reasonable case to dispute that claim. And the other statement, Nadella made, Azure is the only cloud provider enabling highly regulated industries to bring their most sensitive applications to the cloud. Now, reasonable people can debate whether AWS is there yet, but very clearly Oracle and IBM would have something to say about that statement. Now maybe it's not just, would say, "Oh, they're not real clouds, you know, they're just going to hosting in the cloud if you will." But still, when it comes to mission-critical applications, you would think Oracle is really the the leader there. Oh, and Satya also mentioned the claim that the Edge browser, the Microsoft Edge browser, no questions asked, he said, is the best browser for business. And we could see some people having some questions about that. Like isn't Edge based on Chrome? Anyway, so we just had to question these statements and challenge Microsoft to defend them because to us it's a little bit of BS and makes one wonder what else in such as awesome keynote and it was awesome, it was hyperbole. Okay, moving on to Google Cloud Next. The keynote started with Sundar Pichai doing a virtual session, he was remote, stressing the importance of Google Cloud. He mentioned that Google Cloud from its Q2 earnings was on a $25-billion annual run rate. What he didn't mention is that it's also on a 3.6 billion annual operating loss run rate based on its first half performance. Just saying. And we'll dig into that issue a little bit more later in this episode. He also stressed that the investments that Google has made to support its core business and search, like its global network of 22 subsea cables to support things like, YouTube video, great performance obviously that we all rely on, those innovations there. Innovations in BigQuery to support its search business and its threat analysis that it's always had and its AI, it's always been an AI-first company, he's stressed, that they're all leveraged by the Google Cloud Platform, GCP. This is all true by the way. Google has absolutely awesome tech and the talk, as well as his talk, Pichai, but also Kurian's was forward thinking and laid out a vision of the future. But it didn't address in our view, and I talked to Sarbjeet Johal about this as well, today's challenges to the degree that Microsoft did and we expect AWS will at re:Invent this year, it was more out there, more forward thinking, what's possible in the future, somewhat less about today's problem, so I think it's resonates less with today's enterprise players. Thomas Kurian then took over from Sundar Pichai and did a really good job of highlighting customers, and I think he has to, right? He has to say, "Look, we are in this game. We have customers, 9 out of the top 10 media firms use Google Cloud. 8 out of the top 10 manufacturers. 9 out of the top 10 retailers. Same for telecom, same for healthcare. 8 out of the top 10 retail banks." He and Sundar specifically referenced a number of companies, customers, including Avery Dennison, Groupe Renault, H&M, John Hopkins, Prudential, Minna Bank out of Japan, ANZ bank and many, many others during the session. So you know, they had some proof points and you got to give 'em props for that. Now like Microsoft, Google talked about infrastructure, they referenced training processors and regions and compute optionality and storage and how new workloads were emerging, particularly data-driven workloads in AI that required new infrastructure. He explicitly highlighted partnerships within Nvidia and Intel. I didn't see anything on Arm, which somewhat surprised me 'cause I believe Google's working on that or at least has come following in AWS's suit if you will, but maybe that's why they're not mentioning it or maybe I got to do more research there, but let's park that for a minute. But again, as we've extensively discussed in Breaking Analysis in our view when it comes to compute, AWS via its Annapurna acquisition is well ahead of the pack in this area. Arm is making its way into the enterprise, but all three companies are heavily investing in infrastructure, which is great news for customers and the ecosystem. We'll come back to that. Data and AI go hand in hand, and there was no shortage of data talk. Google didn't mention Snowflake or Databricks specifically, but it did mention, by the way, it mentioned Mongo a couple of times, but it did mention Google's, quote, Open Data cloud. Now maybe Google has used that term before, but Snowflake has been marketing the data cloud concept for a couple of years now. So that struck as a shot across the bow to one of its partners and obviously competitor, Snowflake. At BigQuery is a main centerpiece of Google's data strategy. Kurian talked about how they can take any data from any source in any format from any cloud provider with BigQuery Omni and aggregate and understand it. And with the support of Apache Iceberg and Delta and Hudi coming in the future and its open Data Cloud Alliance, they talked a lot about that. So without specifically mentioning Snowflake or Databricks, Kurian co-opted a lot of messaging from these two players, such as life and tech. Kurian also talked about Google Workspace and how it's now at 8 million users up from 6 million just two years ago. There's a lot of discussion on developer optionality and several details on tools supported and the open mantra of Google. And finally on security, Google brought out Kevin Mandian, he's a CUBE alum, extremely impressive individual who's CEO of Mandiant, a leading security service provider and consultancy that Google recently acquired for around 5.3 billion. They talked about moving from a shared responsibility model to a shared fate model, which is again, it's kind of a shot across AWS's bow, kind of shared responsibility model. It's unclear that Google will pay the same penalty if a customer doesn't live up to its portion of the shared responsibility, but we can probably assume that the customer is still going to bear the brunt of the pain, nonetheless. Mandiant is really interesting because it's a services play and Google has stated that it is not a services company, it's going to give partners in the channel plenty of room to play. So we'll see what it does with Mandiant. But Mandiant is a very strong enterprise capability and in the single most important area security. So interesting acquisition by Google. Now as well, unlike Microsoft, Google is not competing with security leaders like Okta and CrowdStrike. Rather, it's partnering aggressively with those firms and prominently putting them forth. All right. Let's get into the ETR survey data and see how Microsoft and Google are positioned in four key markets that we've mentioned before, IaaS, BI analytics, database data platforms and collaboration software. First, let's look at the IaaS cloud. ETR is just about to release its October survey, so I cannot share the that data yet. I can only show July data, but we're going to give you some directional hints throughout this conversation. This chart shows net score or spending momentum on the vertical axis and overlap or presence in the data, i.e., how pervasive the platform is. That's on the horizontal axis. And we've inserted the Wikibon estimates of IaaS revenue for the companies, the Big 3. Actually the Big 4, we included Alibaba. So a couple of points in this somewhat busy data chart. First, Microsoft and AWS as always are dominant on both axes. The red dotted line there at 40% on the vertical axis. That represents a highly elevated spending velocity and all of the Big 3 are above the line. Now at the same time, GCP is well behind the two leaders on the horizontal axis and you can see that in the table insert as well in our revenue estimates. Now why is Azure bigger in the ETR survey when AWS is larger according to the Wikibon revenue estimates? And the answer is because Microsoft with products like 365 and Teams will often be considered by respondents in the survey as cloud by customers, so they fit into that ETR category. But in the insert data we're stripping out applications and SaaS from Microsoft and Google and we're only isolating on IaaS. The other point is when you take a look at the early October returns, you see downward pressure as signified by those dotted arrows on every name. The only exception was Dell, or Dell and IBM, which showing slightly improved momentum. So the survey data generally confirms what we know that AWS and Azure have a massive lead and strong momentum in the marketplace. But the real story is below the line. Unlike Google Cloud, which is on pace to lose well over 3 billion on an operating basis this year, AWS's operating profit is around $20 billion annually. Microsoft's Intelligent Cloud generated more than $30 billion in operating income last fiscal year. Let that sink in for a moment. Now again, that's not to say Google doesn't have traction, it does and Kurian gave some nice proof points and customer examples in his keynote presentation, but the data underscores the lead that Microsoft and AWS have on Google in cloud. And here's a breakdown of ETR's proprietary net score methodology, that vertical axis that we showed you in the previous chart. It asks customers, are you adopting the platform new? That's that lime green. Are you spending 6% or more? That's the forest green. Is you're spending flat? That's the gray. Is you're spending down 6% or worse? That's the pinkest color. Or are you replacing the platform, defecting? That's the bright red. You subtract the reds from the greens and you get a net score. Now one caveat here, which actually is really favorable from Microsoft, the Microsoft data that we're showing here is across the entire Microsoft portfolio. The other point is, this is July data, we'll have an update for you once ETR releases its October results. But we're talking about meaningful samples here, the ends. 620 for AWS over a thousand from Microsoft in more than 450 respondents in the survey for Google. So the real tell is replacements, that bright red. There is virtually no churn for AWS and Microsoft, but Google's churn is 5x, those two in the survey. Now 5% churn is not high, but you'd like to see three things for Google given it's smaller size. One is less churn, two is much, much higher adoption rates in the lime green. Three is a higher percentage of those spending more, the forest green. And four is a lower percentage of those spending less. And none of these conditions really applies here for Google. GCP is still not growing fast enough in our opinion, and doesn't have nearly the traction of the two leaders and that shows up in the survey data. All right, let's look at the next sector, BI analytics. Here we have that same XY dimension. Again, Microsoft dominating the picture. AWS very strong also in both axes. Tableau, very popular and respectable of course acquired by Salesforce on the vertical axis, still looking pretty good there. And again on the horizontal axis, big presence there for Tableau. And Google with Looker and its other platforms is also respectable, but it again, has some work to do. Now notice Streamlit, that's a recent Snowflake acquisition. It's strong in the vertical axis and because of Snowflake's go-to-market (indistinct), it's likely going to move to the right overtime. Grafana is also prominent in the Y axis, but a glimpse at the most recent survey data shows them slightly declining while Looker actually improves a bit. As does Cloudera, which we'll move up slightly. Again, Microsoft just blows you away, doesn't it? All right, now let's get into database and data platform. Same X Y dimensions, but now database and data warehouse. Snowflake as usual takes the top spot on the vertical axis and it is actually keeps moving to the right as well with again, Microsoft and AWS is dominant in the market, as is Oracle on the X axis, albeit it's got less spending velocity, but of course it's the database king. Google is well behind on the X axis but solidly above the 40% line on the vertical axis. Note that virtually all platforms will see pressure in the next survey due to the macro environment. Microsoft might even dip below the 40% line for the first time in a while. Lastly, let's look at the collaboration and productivity software market. This is such an important area for both Microsoft and Google. And just look at Microsoft with 365 and Teams up into the right. I mean just so impressive in ubiquitous. And we've highlighted Google. It's in the pack. It certainly is a nice base with 174 N, which I can tell you that N will rise in the next survey, which is an indication that more people are adopting. But given the investment and the tech behind it and all the AI and Google's resources, you'd really like to see Google in this space above the 40% line, given the importance of this market, of this collaboration area to Google's success and the degree to which they emphasize it in their pitch. And look, this brings up something that we've talked about before on Breaking Analysis. Google doesn't have a tech problem. This is a go-to-market and marketing challenge that Google faces and it's up against two go-to-market champs and Microsoft and AWS. And Google doesn't have the enterprise sales culture. It's trying, it's making progress, but it's like that racehorse that has all the potential in the world, but it's just missing some kind of key ingredient to put it over at the top. It's always coming in third, (chuckles) but we're watching and Google's obviously, making some investments as we shared with earlier. All right. Some final thoughts on what we learned this week and in this research: customers and partners should be thrilled that both Microsoft and Google along with AWS are spending so much money on innovation and building out global platforms. This is a gift to the industry and we should be thankful frankly because it's good for business, it's good for competitiveness and future innovation as a platform that can be built upon. Now we didn't talk much about multi-cloud, we haven't even mentioned supercloud, but both Microsoft and Google have a story that resonates with customers in cross cloud capabilities, unlike AWS at this time. But we never say never when it comes to AWS. They sometimes and oftentimes surprise you. One of the other things that Sarbjeet Johal and John Furrier and I have discussed is that each of the Big 3 is positioning to their respective strengths. AWS is the best IaaS. Microsoft is building out the kind of, quote, we-make-it-easy-for-you cloud, and Google is trying to be the open data cloud with its open-source chops and excellent tech. And that puts added pressure on Snowflake, doesn't it? You know, Thomas Kurian made some comments according to CRN, something to the effect that, we are the only company that can do the data cloud thing across clouds, which again, if I'm being honest is not really accurate. Now I haven't clarified these statements with Google and often things get misquoted, but there's little question that, as AWS has done in the past with Redshift, Google is taking a page out of Snowflake, Databricks as well. A big difference in the Big 3 is that AWS doesn't have this big emphasis on the up-the-stack collaboration software that both Microsoft and Google have, and that for Microsoft and Google will drive captive IaaS consumption. AWS obviously does some of that in database, a lot of that in database, but ISVs that compete with Microsoft and Google should have a greater affinity, one would think, to AWS for competitive reasons. and the same thing could be said in security, we would think because, as I mentioned before, Microsoft competes very directly with CrowdStrike and Okta and others. One of the big thing that Sarbjeet mentioned that I want to call out here, I'd love to have your opinion. AWS specifically, but also Microsoft with Azure have successfully created what Sarbjeet calls brand distance. AWS from the Amazon Retail, and even though AWS all the time talks about Amazon X and Amazon Y is in their product portfolio, but you don't really consider it part of the retail organization 'cause it's not. Azure, same thing, has created its own identity. And it seems that Google still struggles to do that. It's still very highly linked to the sort of core of Google. Now, maybe that's by design, but for enterprise customers, there's still some potential confusion with Google, what's its intentions? How long will they continue to lose money and invest? Are they going to pull the plug like they do on so many other tools? So you know, maybe some rethinking of the marketing there and the positioning. Now we didn't talk much about ecosystem, but it's vital for any cloud player, and Google again has some work to do relative to the leaders. Which brings us to supercloud. The ecosystem and end customers are now in a position this decade to digitally transform. And we're talking here about building out their own clouds, not by putting in and building data centers and installing racks of servers and storage devices, no. Rather to build value on top of the hyperscaler gift that has been presented. And that is a mega trend that we're watching closely in theCUBE community. While there's debate about the supercloud name and so forth, there little question in our minds that the next decade of cloud will not be like the last. All right, we're going to leave it there today. Many thanks to Sarbjeet Johal, and my business partner, John Furrier, for their input to today's episode. Thanks to Alex Myerson who's on production and manages the podcast and Ken Schiffman as well. Kristen Martin and Cheryl Knight helped get the word out on social media and in our newsletters. And Rob Hof is our editor in chief over at SiliconANGLE, who does some wonderful editing. And check out SiliconANGLE, a lot of coverage on Google Cloud Next and Microsoft Ignite. Remember, all these episodes are available as podcast wherever you listen. Just search Breaking Analysis podcast. I publish each week on wikibon.com and siliconangle.com. And you can always get in touch with me via email, david.vellante@siliconangle.com or you can DM me at dvellante or comment on my LinkedIn posts. And please do check out etr.ai, the best survey data in the enterprise tech business. This is Dave Vellante for the CUBE Insights, powered by ETR. Thanks for watching and we'll see you next time on Breaking Analysis. (gentle music)

(bright music) >> Welcome back to the CUBE presents the AWS Startup Showcase The Next Big Thing in cloud startups with AI security and life science tracks, 15 hottest growing startups are presented. And we had a great opening keynote with luminaries in the industry. And now our closing keynote is to get a deeper dive on cracking the code in the enterprise, how startups are changing the game and helping companies change. And they're also changing the game of open source. We have a great guest, Katie Drucker, Head of Business Development, Madrona Venture Group. Katie, thank you for coming on the CUBE for this special closing keynote. >> Thank you for having me, I appreciate it. >> So one of the topics we talked about with Soma from Madrona on the opening keynote, as well as Ali from Databricks is how startups are seeing success faster. So that's the theme of the Cloud speed, agility, but the game has changed in the enterprise. And I want to really discuss with you how growth changes and growth strategy specifically. They talk, go to market. We hear things like good sales to enterprise sales, organic, freemium, there's all kinds of different approaches, but at the end of the day, the most successful companies, the ones that might not be known that just come out of nowhere. So the economics are changing and the buyers are thinking differently. So let's explore that topic. So take us through your view 'cause you have a lot of experience. But first talk about your role at Madrona, what you do. >> Absolutely all great points. So my role at Madrona, I think I have personally one of the more enviable jobs and that my job is to... I get the privilege of working with all of these fantastic entrepreneurs in our portfolio and doing whatever we can as a firm to harness resources, knowledge, expertise, connections, to accelerate their growth. So my role in setting up business development is taking a look at all of those tools in the tool chest and partnering with the portfolio to make it so. And in our portfolio, we have a wide range of companies, some rely on enterprise sales, some have other go to markets. Some are direct to consumer, a wide range. >> Talk about the growth strategies that you see evolving because what's clear with the pandemic. And as we come out of it is that there are growth plays happening that don't look a little bit differently, more obvious now because of the Cloud scale, we're seeing companies like Databricks, like Snowflake, like other companies that have been built on the cloud or standalone. What are some of the new growth techniques, or I don't want to say growth hacking, that is a pejorative term, but like just a way for companies to quickly describe their value to an enterprise buyer who's moving away from the old RFP days of vendor selection. The game has changed. So take us through how you see secret key and unlocking that new equation of how to present value to an enterprise and how you see enterprises evaluating startups. >> Yes, absolutely. Well, and that's got a question, that's got a few components nestled in what I think are some bigger trends going on. AWS of course brought us the Cloud first. I think now the Cloud is more and more a utility. And so it's incumbent upon thinking about how an enterprise 'cause using the Cloud is going to go up the value stack and partner with its cloud provider and other service providers. I think also with that agility of operations, you have thinning, if you will, the systems of record and a lot of new entrance into this space that are saying things like, how can we harness AIML and other emerging trends to provide more value directly around work streams that were historically locked into those systems of record? And then I think you also have some price plans that are far more flexible around usage based as opposed to just flat subscription or even these big clunky annual or multi-year RFP type stuff. So all of those trends are really designed in ways that favor the emerging startup. And I think if done well, and in partnership with those underlying cloud providers, there can be some amazing benefits that the enterprise realizes an opportunity for those startups to grow. And I think that's what you're seeing. I think there's also this emergence of a buyer that's different than the CIO or the site the CISO. You have things with low code, no code. You've got other buyers in the organization, other line of business executives that are coming to the table, making software purchase decisions. And then you also have empowered developers that are these citizen builders and developer buyers and personas that really matter. So lots of inroads in places for a startup to reach in the enterprise to make a connection and to bring value. That's a great insight. I want to ask that just if you don't mind follow up on that, you mentioned personas. And what we're seeing is the shift happens. There's new roles that are emerging and new things that are being reconfigured or refactored if you will, whether it's human resources or AI, and you mentioned ML playing a role in automation. These are big parts of the new value proposition. How should companies posture to the customer? Because I don't want to say pivot 'cause that means it's not working but mostly extending our iterating around their positioning because as new things have not yet been realized, it might not be operationalized in a company or maybe new things need to be operationalized, it's a new solution for that. Positioning the value is super important and a lot of companies often struggle with that, but also if they get it right, that's the key. What's your feeling on startups in their positioning? So people will dismiss it like, "Oh, that's marketing." But maybe that's important. What's your thoughts on the great positioning question? >> I've been in this industry a long time. And I think there are some things that are just tried and true, and it is not unique to tech, which is, look, you have to tell a story and you have to reach the customer and you have to speak to the customer's need. And what that means is, AWS is a great example. They're famous for the whole concept of working back from the customer and thinking about what that customer's need is. I think any startup that is looking to partner or work alongside of AWS really has to embody that very, very customer centric way of thinking about things, even though, as we just talked about those personas are changing who that customer really is in the enterprise. And then speaking to that value proposition and meeting that customer and creating a dialogue with them that really helps to understand not only what their pain points are, but how you were offering solves those pain points. And sometimes the customer doesn't realize that that is their pain point and that's part of the education and part of the way in which you engage that dialogue. That doesn't change a lot, just generation to generation. I think the modality of how we have that dialogue, the methods in which we choose to convey that change, but that basic discussion is what makes us human. >> What's your... Great, great, great insight. I want to ask you on the value proposition question again, the question I often get, and it's hard to answer is am I competing on value or am I competing on commodity? And depending on where you're in the stack, there could be different things like, for example, land is getting faster, smaller, cheaper, as an example on Amazon. That's driving down to low cost high value, but it shifts up the stack. You start to see in companies this changing the criteria for how to evaluate. So an enterprise might be struggling. And I often hear enterprises say, "I don't know how to pick who I need. I buy tools, I don't buy many platforms." So they're constantly trying to look for that answer key, if you will, what's your thoughts on the changing requirements of an enterprise? And how to do vendor selection. >> Yeah, so obviously I don't think there's a single magic bullet. I always liked just philosophically to think about, I think it's always easier and frankly more exciting as a buyer to want to buy stuff that's going to help me make more revenue and build and grow as opposed to do things that save me money. And just in a binary way, I like to think which side of the fence are you sitting on as a product offering? And the best ways that you can articulate that, what opportunities are you unlocking for your customer? The problems that you're solving, what kind of growth and what impact is that going to lead to, even if you're one or two removed from that? And again, that's not a new concept. And I think that the companies that have that squarely in mind when they think about their go-to market strategy, when they think about the dialogue they're having, when they think about the problems that they're solving, find a much faster path. And I think that also speaks to why we're seeing so many explosion in the line of business, SAS apps that are out there. Again, that thinning of the systems of record, really thinking about what are the scenarios and work streams that we can have happened that are going to help with that revenue growth and unlocking those opportunities. >> What's the common startup challenge that you see when they're trying to do business development? Usually they build the product first, product led value, you hear that a lot. And then they go, "Okay, we're ready to sell, hire a sales guy." That seems to be shifting away because of the go to markets are changing. What are some of the challenges that startups have? What are some that you're seeing? >> Well, and I think the point that you're making about the changes are really almost a result of the trends that we're talking about. The sales organization itself is becoming... These work streams are becoming instrumented. Data is being collected, insights are being derived off of those things. So you see companies like Clary or Highspot or two examples or tutorial that are in our portfolio that are looking at that action and making the art of sales and marketing far more sophisticated overall, which then leads to the different growth hacking and the different insights that are driven. I think the common mistakes that I see across the board, especially with earlier stage startups, look you got to find product market fit. I think that's always... You start with a thesis or a belief and a passion that you're building something that you think the market needs. And it's a lot of dialogue you have to have to make sure that you do find that. I think once you find that another common problem that I see is leading with an explanation of technology. And again, not focusing on the buyer or the... Sorry, the buyer about solving a problem and focusing on that problem as opposed to focusing on how cool your technology is. Those are basic and really, really simple. And then I think setting a set of expectations, especially as it comes to business development and partnering with companies like AWS. The researching that you need to adequately meet the demand that can be turned on. And then I'm sure you heard about from Databricks, from an organization like AWS, you have to be pragmatic. >> Yeah, Databricks gone from zero a software sales a few years ago to over a billion. Now it looks like a Snowflake which came out of nowhere and they had a great product, but built on Amazon, they became the data cloud on top of Amazon. And now they're growing just whole new business models and new business development techniques. Katie, thank you for sharing your insight here. The CUBE's closing keynote. Thanks for coming on. >> Appreciate it, thank you. >> Okay, Katie Drucker, Head of Business Development at Madrona Venture Group. Premier VC in the Seattle area and beyond they're doing a lot of cloud action. And of course they know AWS very well and investing in the ecosystem. So great, great stuff there. Next up is Peter Wagner partner at Wing.VX. Love this URL first of all 'cause of the VC domain extension. But Peter is a long time venture capitalist. I've been following his career. He goes back to the old networking days, back when the internet was being connected during the OSI days, when the TCP IP open systems interconnect was really happening and created so much. Well, Peter, great to see you on the CUBE here and congratulations with success at Wing VC. >> Yeah, thanks, John. It's great to be here. I really appreciate you having me. >> Reason why I wanted to have you come on. First of all, you had a great track record in investing over many decades. You've seen many waves of innovation, startups. You've seen all the stories. You've seen the movie a few times, as I say. But now more than ever, enterprise wise it's probably the hottest I've ever seen. And you've got a confluence of many things on the stack. You were also an early seed investor in Snowflake, well-regarded as a huge success. So you've got your eye on some of these awesome deals. Got a great partner over there has got a network experience as well. What is the big aha moment here for the industry? Because it's not your classic enterprise startups anymore. They have multiple things going on and some of the winners are not even known. They come out of nowhere and they connect to enterprise and get the lucrative positions and can create a moat and value. Like out of nowhere, it's not the old way of like going to the airport and doing an RFP and going through the stringent requirements, and then you're in, you get to win the lucrative contract and you're in. Not anymore, that seems to have changed. What's your take on this 'cause people are trying to crack the code here and sometimes you don't have to be well-known. >> Yeah, well, thank goodness the game has changed 'cause that old thing was (indistinct) So I for one don't miss it. There was some modernization movement in the enterprise and the modern enterprise is built on data powered by AI infrastructure. That's an agile workplace. All three of those things are really transformational. There's big investments being made by enterprises, a lot of receptivity and openness to technology to enable all those agendas, and that translates to good prospects for startups. So I think as far as my career goes, I've never seen a more positive or fertile ground for startups in terms of penetrating enterprise, it doesn't mean it's easy to do, but you have a receptive audience on the other side and that hasn't necessarily always been the case. >> Yeah, I got to ask you, I know that you're a big sailor and your family and Franks Lubens also has a boat and sailing metaphor is always good to have 'cause you got to have a race that's being run and they have tactics. And this game that we're in now, you see the successes, there's investment thesises, and then there's also actually bets. And I want to get your thoughts on this because a lot of enterprises are trying to figure out how to evaluate startups and starts also can make the wrong bet. They could sail to the wrong continent and be in the wrong spot. So how do you pick the winners and how should enterprises understand how to pick winners too? >> Yeah, well, one of the real important things right now that enterprise is facing startups are learning how to do and so learning how to leverage product led growth dynamics in selling to the enterprise. And so product led growth has certainly always been important consumer facing companies. And then there's a few enterprise facing companies, early ones that cracked the code, as you said. And some of these examples are so old, if you think about, like the ones that people will want to talk about them and talk about Classy and want to talk about Twilio and these were of course are iconic companies that showed the way for others. But even before that, folks like Solar Winds, they'd go to market model, clearly product red, bottom stuff. Back then we didn't even have those words to talk about it. And then some of the examples are so enormous if think about them like the one right in front of your face, like AWS. (laughing) Pretty good PLG, (indistinct) but it targeted builders, it targeted developers and flipped over the way you think about enterprise infrastructure, as a result some how every company, even if they're harnessing relatively conventional sales and marketing motion, and you think about product led growth as a way to kick that motion off. And so it's not really an either word even more We might think OPLJ, that means there's no sales keep one company not true, but here's a way to set the table so that you can very efficiently use your sales and marketing resources, only have the most attractive targets and ones that are really (indistinct) >> I love the product led growth. I got to ask you because in the networking days, I remember the term inevitability was used being nested in a solution that they're just going to Cisco off router and a firewall is one you can unplug and replace with another vendor. Cisco you'd have to go through no switching costs were huge. So when you get it to the Cloud, how do you see the competitiveness? Because we were riffing on this with Ali, from Databricks where the lock-in might be value. The more value provider is the lock-in. Is their nestedness? Is their intimate ability as a competitive advantage for some of these starts? How do you look at that? Because startups, they're using open source. They want to have a land position in an enterprise, but how do they create that sustainable competitive advantage going forward? Because again, this is what you do. You bet on ones that you can see that could establish a model whatever we want to call it, but a competitive advantage and ongoing nested position. >> Sometimes it has to do with data, John, and so you mentioned Snowflake a couple of times here, a big part of Snowflake's strategy is what they now call the data cloud. And one of the reasons you go there is not to just be able to process data, to actually get access to it, exchange with the partners. And then that of course is a great reason for the customers to come to the Snowflake platform. And so the more data it gets more customers, it gets more data, the whole thing start spinning in the right direction. That's a really big example, but all of these startups that are using ML in a fundamental way, applying it in a novel way, the data modes are really important. So getting to the right data sources and training on it, and then putting it to work so that you can see that in this process better and doing this earlier on that scale. That's a big part of success. Another company that I work with is a good example that I call (indistinct) which works in sales technology space, really crushing it in terms of building better sales organizations both at performance level, in terms of the intelligence level, and just overall revenue attainment using ML, and using novel data sources, like the previously lost data or phone calls or Zoom calls as you already know. So I think the data advantages are really big. And smart startups are thinking through it early. >> It's interest-- >> And they're planning by the way, not to ramble on too much, but they're betting that PLG strategy. So their land option is designed not just to be an interesting way to gain usage, but it's also a way to gain access to data that then enables the expand in a component. >> That is a huge call-out point there, I was going to ask another question, but I think that is the key I see. It's a new go to market in a way. product led with that kind of approach gets you a beachhead and you get a little position, you get some data that is a cloud model, it means variable, whatever you want to call it variable value proposition, value proof, or whatever, getting that data and reiterating it. So it brings up the whole philosophical question of okay, product led growth, I love that with product led growth of data, I get that. Remember the old platform versus a tool? That's the way buyers used to think. How has that changed? 'Cause now almost, this conversation throws out the whole platform thing, but isn't like a platform. >> It looks like it's all. (laughs) you can if it is a platform, though to do that you can reveal that later, but you're looking for adoption, so if it's down stock product, you're looking for adoption by like developers or DevOps people or SOEs, and they're trying to solve a problem, and they want rapid gratification. So they don't want to have an architectural boomimg, placed in front of them. And if it's up stock product and application, then it's a user or the business or whatever that is, is adopting the application. And again, they're trying to solve a very specific problem. You need instant and immediate obvious time and value. And now you have a ticket to the dance and build on that and maybe a platform strategy can gradually take shape. But you know who's not in this conversation is the CIO, it's like, "I'm always the last to know." >> That's the CISO though. And they got him there on the firing lines. CISOs are buying tools like it's nobody's business. They need everything. They'll buy anything or you go meet with sand, they'll buy it. >> And you make it sound so easy. (laughing) We do a lot of security investment if only (indistinct) (laughing) >> I'm a little bit over the top, but CISOs are under a lot of pressure. I would talk to the CISO at Capital One and he was saying that he's on Amazon, now he's going to another cloud, not as a hedge, but he doesn't want to focus development teams. So he's making human resource decisions as well. Again, back to what IT used to be back in the old days where you made a vendor decision, you built around it. So again, clouds play that way. I see that happening. But the question is that I think you nailed this whole idea of cross hairs on the target persona, because you got to know who you are and then go to the market. So if you know you're a problem solving and the lower in the stack, do it and get a beachhead. That's a strategy, you can do that. You can't try to be the platform and then solve a problem at the same time. So you got to be careful. Is that what you were getting at? >> Well, I think you just understand what you're trying to achieve in that line of notion. And how those dynamics work and you just can't drag it out. And they could make it too difficult. Another company I work with is a very strategic cloud data platform. It's a (indistinct) on systems. We're not trying to foist that vision though (laughs) or not adopters today. We're solving some thorny problems with them in the short term, rapid time to value operational needs in scale. And then yeah, once they found success with (indistinct) there's would be an opportunity to be increasing the platform, and an obstacle for those customers. But we're not talking about that. >> Well, Peter, I appreciate you taking the time and coming out of a board meeting, I know that you're super busy and I really appreciate you making time for us. I know you've got an impressive partner in (indistinct) who's a former Sequoia, but Redback Networks part of that company over the years, you guys are doing extremely well, even a unique investment thesis. I'd like you to put the plug in for the firm. I think you guys have a good approach. I like what you guys are doing. You're humble, you don't brag a lot, but you make a lot of great investments. So could you take them in to explain what your investment thesis is and then how that relates to how an enterprise is making their investment thesis? >> Yeah, yeah, for sure. Well, the concept that I described earlier that the modern enterprise movement as a workplace built on data powered by AI. That's what we're trying to work with founders to enable. And also we're investing in companies that build the products and services that enable that modern enterprise to exist. And we do it from very early stages, but with a longterm outlook. So we'll be leading series and series, rounds of investment but staying deeply involved, both operationally financially throughout the whole life cycle of the company. And then we've done that a bunch of times, our goal is always the big independent public company and they don't always make it but enough for them to have it all be worthwhile. An interesting special case of this, and by the way, I think it intersects with some of startup showcase here is in the life sciences. And I know you were highlighting a lot of healthcare websites and deals, and that's a vertical where to disrupt tremendous impact of data both new data availability and new ways to put it to use. I know several of my partners are very focused on that. They call it bio-X data. It's a transformation all on its own. >> That's awesome. And I think that the reason why we're focusing on these verticals is if you have a cloud horizontal scale view and vertically specialized with machine learning, every vertical is impacted by data. It's so interesting that I think, first start, I was probably best time to be a cloud startup right now. I really am bullish on it. So I appreciate you taking the time Peter to come in again from your board meeting, popping out. Thanks for-- (indistinct) Go back in and approve those stock options for all the employees. Yeah, thanks for coming on. Appreciate it. >> All right, thank you John, it's a pleasure. >> Okay, Peter Wagner, Premier VC, very humble Wing.VC is a great firm. Really respect them. They do a lot of great investing investments, Snowflake, and we have Dave Vellante back who knows a lot about Snowflake's been covering like a blanket and Sarbjeet Johal. Cloud Influencer friend of the CUBE. Cloud commentator and cloud experience built clouds, runs clouds now invests. So V. Dave, thanks for coming back on. You heard Peter Wagner at Wing VC. These guys have their roots in networking, which networking back in the day was, V. Dave. You remember the internet Cisco days, remember Cisco, Wellfleet routers. I think Peter invested in Arrow Point, remember Arrow Point, that was about in the 495 belt where you were. >> Lynch's company. >> That was Chris Lynch's company. I think, was he a sales guy there? (indistinct) >> That was his first big hit I think. >> All right, well guys, let's wrap this up. We've got a great program here. Sarbjeet, thank you for coming on. >> No worries. Glad to be here todays. >> Hey, Sarbjeet. >> First of all, really appreciate the Twitter activity lately on the commentary, the observability piece on Jeremy Burton's launch, Dave was phenomenal, but Peter was talking about this dynamic and I think ties this cracking the code thing together, which is there's a product led strategy that feels like a platform, but it's also a tool. In other words, it's not mutually exclusive, the old methods thrown out the window. Land in an account, know what problem you're solving. If you're below the stack, nail it, get data and go from there. If you're a process improvement up the stack, you have to much more of a platform longer-term sale, more business oriented, different motions, different mechanics. What do you think about that? What's your reaction? >> Yeah, I was thinking about this when I was listening to some of the startups pitching, if you will, or talking about what they bring to the table in this cloud scale or cloud era, if you will. And there are tools, there are applications and then they're big monolithic platforms, if you will. And then they're part of the ecosystem. So I think the companies need to know where they play. A startup cannot be platform from the get-go I believe. Now many aspire to be, but they have to start with tooling. I believe in, especially in B2B side of things, and then go into the applications, one way is to go into the application area, if you will, like a very precise use cases for certain verticals and stuff like that. And other parties that are going into the platform, which is like horizontal play, if you will, in technology. So I think they have to understand their age, like how old they are, how new they are, how small they are, because when their size matter when you are procuring as a big business, procuring your technology vendors size matters and the economic viability matters and their proximity to other windows matter as well. So I think we'll jump into that in other discussions later, but I think that's key, as you said. >> I would agree with that. I would phrase it in my mind, somewhat differently from Sarbjeet which is you have product led growth, and that's your early phase and you get product market fit, you get product led growth, and then you expand and there are many, many examples of this, and that's when you... As part of your team expansion strategy, you're going to get into the platform discussion. There's so many examples of that. You take a look at Ali Ghodsi today with what's happening at Databricks, Snowflake is another good example. They've started with product led growth. And then now they're like, "Okay, we've got to expand the team." Okta is another example that just acquired zero. That's about building out the platform, versus more of a point product. And there's just many, many examples of that, but you cannot to your point, very hard to start with a platform. Arm did it, but that was like a one in a million chance. >> It's just harder, especially if it's new and it's not operationalized yet. So one of the things Dave that we've observed the Cloud is some of the best known successes where nobody's not known at all, database we've been covering from the beginning 'cause we were close to that movement when they came out of Berkeley. But they still were misunderstood and they just started generating revenue in only last year. So again, only a few years ago, zero software revenue, now they're approaching a billion dollars. So it's not easy to make these vendor selections anymore. And if you're new and you don't have someone to operate it or your there's no department and the departments changing, that's another problem. These are all like enterprisey problems. What's your thoughts on that, Dave? >> Well, I think there's a big discussion right now when you've been talking all day about how should enterprise think about startups and think about most of these startups they're software companies and software is very capital efficient business. At the same time, these companies are raising hundreds of millions, sometimes over a billion dollars before they go to IPO. Why is that? A lot of it's going to promotion. I look at it as... And there's a big discussion going on but well, maybe sales can be more efficient and more direct and so forth. I really think it comes down to the golden rule. Two things really mattered in the early days in the startup it's sales and engineering. And writers should probably say engineering and sales and start with engineering. And then you got to figure out your go to market. Everything else is peripheral to those two and you don't get those two things right, you struggle. And I think that's what some of these successful startups are proving. >> Sarbjeet, what's your take on that point? >> Could you repeat the point again? Sorry, I lost-- >> As cloud scale comes in this whole idea of competing, the roles are changing. So look at IOT, look at the Edge, for instance, you got all kinds of new use cases that no one actually knows is a problem to solve. It's just pure opportunity. So there's no one's operational I could have a product, but it don't know we can buy it yet. It's a problem. >> Yeah, I think the solutions have to be point solutions and the startups need to focus on the practitioners, number one, not the big buyers, not the IT, if you will, but the line of business, even within that sphere, like just focus on the practitioners who are going to use that technology. I talked to, I think it wasn't Fiddler, no, it was CoreLogics. I think that story was great today earlier in how they kind of struggle in the beginning, they were trying to do a big bang approach as a startup, but then they almost stumbled. And then they found their mojo, if you will. They went to Don the market, actually, that's a very classic theory of disruption, like what we study from Harvard School of Business that you go down the market, go to the non-consumers, because if you're trying to compete head to head with big guys. Because most of the big guys have lot of feature and functionality, especially at the platform level. And if you're trying to innovate in that space, you have to go to the practitioners and solve their core problems and then learn and expand kind of thing. So I think you have to focus on practitioners a lot more than the traditional oracle buyers. >> Sarbjeet, we had a great thread last night in Twitter, on observability that you started. And there's a couple of examples there. Chaos searches and relatively small company right now, they just raised them though. And they're part of this star showcase. And they could've said, "Hey, we're going to go after Splunk." But they chose not to. They said, "Okay, let's kind of disrupt the elk stack and simplify that." Another example is a company observed, you've mentioned Jeremy Burton's company, John. They're focused really on SAS companies. They're not going after initially these complicated enterprise deals because they got to get it right or else they'll get churn, and churn is that silent killer of software companies. >> The interesting other company that was on the showcase was Tetra Science. I don't know if you noticed that one in the life science track, and again, Peter Wagner pointed out the life science. That's an under recognized in the press vertical that's exploding. Certainly during the pandemic you saw it, Tetra science is an R&D cloud, Dave, R&D data cloud. So pharmaceuticals, they need to do their research. So the pandemic has brought to life, this now notion of tapping into data resources, not just data lakes, but like real deal. >> Yeah, you and Natalie and I were talking about that this morning and that's one of the opportunities for R&D and you have all these different data sources and yeah, it's not just about the data lake. It's about the ecosystem that you're building around them. And I see, it's really interesting to juxtapose what Databricks is doing and what Snowflake is doing. They've got different strategies, but they play a part there. You can see how ecosystems can build that system. It's not one company is going to solve all these problems. It's going to really have to be connections across these various companies. And that's what the Cloud enables and ecosystems have all this data flowing that can really drive new insights. >> And I want to call your attention to a tweet Sarbjeet you wrote about Splunk's earnings and they're data companies as well. They got Teresa Carlson there now AWS as the president, working with Doug, that should change the game a little bit more. But there was a thread of the neath there. Andy Thry says to replies to Dave you or Sarbjeet, you, if you're on AWS, they're a fine solution. The world doesn't just revolve around AWS, smiley face. Well, a lot of it does actually. So (laughing) nice point, Andy. But he brings up this thing and Ali brought it up too, Hybrid now is a new operating system for what now Edge does. So we got Mobile World Congress happening this month in person. This whole Telco 5G brings up a whole nother piece of the Cloud puzzle. Jeff Barr pointed out in his keynote, Dave. Guys, I want to get your reaction. The Edge now is... I'm calling it the super Edge because it's not just Edge as we know it before. You're going to have these pops, these points of presence that are going to have wavelength as your spectrum or whatever they have. I think that's the solution for Azure. So you're going to have all this new cloud power for low latency applications. Self-driving delivery VR, AR, gaming, Telemetry data from Teslas, you name it, it's happening. This is huge, what's your thoughts? Sarbjeet, we'll start with you. >> Yeah, I think Edge is like bound to happen. And for many reasons, the volume of data is increasing. Our use cases are also expanding if you will, with the democratization of computer analysis. Specialization of computer, actually Dave wrote extensively about how Intel and other chip players are gearing up for that future if you will. Most of the inference in the AI world will happen in the field close to the workloads if you will, that can be mobility, the self-driving car that can be AR, VR. It can be healthcare. It can be gaming, you name it. Those are the few use cases, which are in the forefront and what alarm or use cases will come into the play I believe. I've said this many times, Edge, I think it will be dominated by the hyperscalers, mainly because they're building their Metro data centers now. And with a very low latency in the Metro areas where the population is, we're serving the people still, not the machines yet, or the empty areas where there is no population. So wherever the population is, all these big players are putting their data centers there. And I think they will dominate the Edge. And I know some Edge lovers. (indistinct) >> Edge huggers. >> Edge huggers, yeah. They don't like the hyperscalers story, but I think that's the way were' going. Why would we go backwards? >> I think you're right, first of all, I agree with the hyperscale dying you look at the top three clouds right now. They're all in the Edge, Hardcore it's a huge competitive battleground, Dave. And I think the missing piece, that's going to be uncovered at Mobile Congress. Maybe they'll miss it this year, but it's the developer traction, whoever wins the developer market or wins the loyalty, winning over the market or having adoption. The applications will drive the Edge. >> And I would add the fourth cloud is Alibaba. Alibaba is actually bigger than Google and they're crushing it as well. But I would say this, first of all, it's popular to say, "Oh not everything's going to move into the Cloud, John, Dave, Sarbjeet." But the fact is that AWS they're trend setter. They are crushing it in terms of features. And you'd look at what they're doing in the plumbing with Annapurna. Everybody's following suit. So you can't just ignore that, number one. Second thing is what is the Edge? Well, the edge is... Where's the logical place to process the data? That's what the Edge is. And I think to your point, both Sarbjeet and John, the Edge is going to be won by developers. It's going to be one by programmability and it's going to be low cost and really super efficient. And most of the data is going to stay at the Edge. And so who is in the best position to actually create that? Is it going to be somebody who was taking an x86 box and throw it over the fence and give it a fancy name with the Edge in it and saying, "Here's our Edge box." No, that's not what's going to win the Edge. And so I think first of all it's huge, it's wide open. And I think where's the innovation coming from? I agree with you it's the hyperscalers. >> I think the developers as John said, developers are the kingmakers. They build the solutions. And in that context, I always talk about the skills gravity, a lot of people are educated in certain technologies and they will keep using those technologies. Their proximity to that technology is huge and they don't want to learn something new. So as humans we just tend to go what we know how to use it. So from that front, I usually talk with consumption economics of cloud and Edge. It has to focus on the practitioners. And in this case, practitioners are developers because you're just cooking up those solutions right now. We're not serving that in huge quantity right now, but-- >> Well, let's unpack that Sarbjeet, let's unpack that 'cause I think you're right on the money on that. The consumption of the tech and also the consumption of the application, the end use and end user. And I think the reason why hyperscalers will continue to dominate besides the fact that they have all the resource and they're going to bring that to the Edge, is that the developers are going to be driving the applications at the Edge. So if you're low latency Edge, that's going to open up new applications, not just the obvious ones I did mention, gaming, VR, AR, metaverse and other things that are obvious. There's going to be non-obvious things that are going to be huge that are going to come out from the developers. But the Cloud native aspect of the hyperscalers, to me is where the scales are tipping, let me explain. IT was built to build a supply resource to the businesses who were writing business applications. Mostly driven by IBM in the mainframe in the old days, Dave, and then IT became IT. Telcos have been OT closed, "This is our thing, that's it." Now they have to open up. And the Cloud native technologies is the fastest way to value. And I think that paths, Sarbjeet is going to be defined by this new developer and this new super Edge concept. So I think it's going to be wide open. I don't know what to say. I can't guess, but it's going to be creative. >> Let me ask you a question. You said years ago, data's new development kit, does low code and no code to Sarbjeet's point, change the equation? In other words, putting data in the hands of those OT professionals, those practitioners who have the context. Does low-code and no-code enable, more of those protocols? I know it's a bromide, but the citizen developer, and what impact does that have? And who's in the best position? >> Well, I think that anything that reduces friction to getting stuff out there that can be automated, will increase the value. And then the question is, that's not even a debate. That's just fact that's going to be like rent, massive rise. Then the issue comes down to who has the best asset? The software asset that's eating the world or the tower and the physical infrastructure. So if the physical infrastructure aka the Telcos, can't generate value fast enough, in my opinion, the private equity will come in and take it over, and then refactor that business model to take advantage of the over the top software model. That to me is the big stare down competition between the Telco world and this new cloud native, whichever one yields in valley is going to blink first, if you say. And I think the Cloud native wins this one hands down because the assets are valuable, but only if they enable the new model. If the old model tries to hang on to the old hog, the old model as the Edge hugger, as Sarbjeet says, they'll just going to slowly milk that cow dry. So it's like, it's over. So to me, they have to move. And I think this Mobile World Congress day, we will see, we will be looking for that. >> Yeah, I think that in the Mobile World Congress context, I think Telcos should partner with the hyperscalers very closely like everybody else has. And they have to cave in. (laughs) I usually say that to them, like the people came in IBM tried to fight and they cave in. Other second tier vendors tried to fight the big cloud vendors like top three or four. And then they cave in. okay, we will serve our stuff through your cloud. And that's where all the buyers are congregating. They're going to buy stuff along with the skills gravity, the feature proximity. I've got another term I'll turn a coin. It matters a lot when you're doing one thing and you want to do another thing when you're doing all this transactional stuff and regular stuff, and now you want to do data science, where do you go? You go next to it, wherever you have been. Your skills are in that same bucket. And then also you don't have to write a new contract with a new vendor, you just go there. So in order to serve, this is a lesson for startups as well. You need to prepare yourself for being in the Cloud marketplaces. You cannot go alone independently to fight. >> Cloud marketplace is going to replace procurement, for sure, we know that. And this brings up the point, Dave, we talked about years ago, remember on the CUBE. We said, there's going to be Tier two clouds. I used that word in quotes cause nothing... What does it even mean Tier two. And we were talking about like Amazon, versus Microsoft and Google. We set at the time and Alibaba but they're in China, put that aside for a second, but the big three. They're going to win it all. And they're all going to be successful to a relative terms, but whoever can enable that second tier. And it ended up happening, Snowflake is that example. As is Databricks as is others. So Google and Microsoft as fast as they can replicate the success of AWS by enabling someone to build their business on their cloud in a way that allows the customer to refactor their business will win. They will win most of the lion's share my opinion. So I think that applies to the Edge as well. So whoever can come in and say... Whichever cloud says, "I'm going to enable the next Snowflake, the next enterprise solution." I think takes it. >> Well, I think that it comes back... Every conversation coming back to the data. And if you think about the prevailing way in which we treated data with the exceptions of the two data driven companies in their quotes is as we've shoved all the data into some single repository and tried to come up with a single version of the truth and it's adjudicated by a centralized team, with hyper specialized roles. And then guess what? The line of business, there's no context for the business in that data architecture or data Corpus, if you will. And then the time it takes to go from idea for a data product or data service commoditization is way too long. And that's changing. And the winners are going to be the ones who are able to exploit this notion of leaving data where it is, the point about data gravity or courting a new term. I liked that, I think you said skills gravity. And then enabling the business lines to have access to their own data teams. That's exactly what Ali Ghodsi, he was saying this morning. And really having the ability to create their own data products without having to go bow down to an ivory tower. That is an emerging model. All right, well guys, I really appreciate the wrap up here, Dave and Sarbjeet. I'd love to get your final thoughts. I'll just start by saying that one of the highlights for me was the luminary guests size of 15 great companies, the luminary guests we had from our community on our keynotes today, but Ali Ghodsi said, "Don't listen to what everyone's saying in the press." That was his position. He says, "You got to figure out where the puck's going." He didn't say that, but I'm saying, I'm paraphrasing what he said. And I love how he brought up Sky Cloud. I call it Sky net. That's an interesting philosophy. And then he also brought up that machine learning auto ML has got to be table stakes. So I think to me, that's the highlight walk away. And the second one is this idea that the enterprises have to have a new way to procure and not just the consumption, but some vendor selection. I think it's going to be very interesting as value can be proved with data. So maybe the procurement process becomes, here's a beachhead, here's a little bit of data. Let me see what it can do. >> I would say... Again, I said it was this morning, that the big four have given... Last year they spent a hundred billion dollars more on CapEx. To me, that's a gift. In so many companies, especially focusing on trying to hang onto the legacy business. They're saying, "Well not everything's going to move to the Cloud." Whatever, the narrative should change to, "Hey, thank you for that gift. We're now going to build value on top of the Cloud." Ali Ghodsi laid that out, how Databricks is doing it. And it's clearly what Snowflake's new with the data cloud. It basically a layer that abstracts all that underlying complexity and add value on top. Eventually going out to the Edge. That's a value added model that's enabled by the hyperscalers. And that to me, if I have to evaluate where I'm going to place my bets as a CIO or IT practitioner, I'm going to look at who are the ones that are actually embracing that investment that's been made and adding value on top in a way that can drive my data-driven, my digital business or whatever buzzword you want to throw on. >> Yeah, I think we were talking about the startups in today's sessions. I think for startups, my advice is to be as close as you can be to hyperscalers and anybody who awards them, they will cave in at the end of the day, because that's where the whole span of gravity is. That's what the innovation gravity is, everybody's gravitating towards that. And I would say quite a few times in the last couple of years that the rate of innovation happening in a non-cloud companies, when I talk about non-cloud means are not public companies. I think it's like diminishing, if you will, as compared to in cloud, there's a lot of innovation. The Cloud companies are not paying by power people anymore. They have all sophisticated platforms and leverage those, and also leverage the marketplaces and leverage their buyers. And the key will be how you highlight yourself in that cloud market place if you will. It's like in a grocery store where your product is placed and you have to market around it, and you have to have a good story telling team in place as well after you do the product market fit. I think that's a key. I think just being close to the Cloud providers, that's the way to go for startups. >> Real, real quick. Each of you talk about what it takes to crack the code for the enterprise in the modern era now. Dave, we'll start with you. What's it take? (indistinct) >> You got to have it be solving a problem that is 10X better at one 10th a cost of anybody else, if you're a small company, that rule number one. Number two is you obviously got to get product market fit. You got to then figure out. And I think, and again, you're in your early phases, you have to be almost processed builders, figure out... Your KPIs should all be built around retention. How do I define customer success? How do I keep customers and how do I make them loyal so that I know that my cost of acquisition is going to be at least one-third or lower than my lifetime value of that customer? So you've got to nail that. And then once you nail that, you've got to codify that process in the next phase, which really probably gets into your platform discussion. And that's really where you can start to standardize and scale and figure out your go to market and the relationship between marketing spend and sales productivity. And then when you get that, then you got to move on to figure out your Mot. Your Mot might just be a brand. It might be some secret sauce, but more often than not though, it's going to be the relationship that you build. And I think you've got to think about those phases and in today's world, you got to move really fast. Sarbjeet, real quick. What's the secret to crack the code? >> I think the secret to crack the code is partnership and alliances. As a small company selling to the bigger enterprises, the vendors size will be one of the big objections. Even if they don't say it, it's on the back of their mind, "What if these guys disappear tomorrow what would we do if we pick this technology?" And another thing is like, if you're building on the left side, which is the developer side, not on the right side, which is the operations or production side, if you will, you have to understand the sales cycles are longer on the right side and left side is easier to get to, but that's why we see a lot more startups. And on the left side of your DevOps space, if you will, because it's easier to sell to practitioners and market to them and then show the value correctly. And also understand that on the left side, the developers are very know how hungry, on the right side people are very cost-conscious. So understanding the traits of these different personas, if you will buyers, it will, I think set you apart. And as Dave said, you have to solve a problem, focus on practitioners first, because you're small. You have to solve political problems very well. And then you can expand. >> Well, guys, I really appreciate the time. Dave, we're going to do more of these, Sarbjeet we're going to do more of these. We're going to add more community to it. We're going to add our community rooms next time. We're going to do these quarterly and try to do them as more frequently, we learned a lot and we still got a lot more to learn. There's a lot more contribution out in the community that we're going to tap into. Certainly the CUBE Club as we call it, Dave. We're going to build this actively around Cloud. This is another 20 years. The Edge brings us more life with Cloud, it's really exciting. And again, enterprise is no longer an enterprise, it's just the world now. So great companies here, the next Databricks, the next IPO. The next big thing is in this list, Dave. >> Hey, John, we'll see you in Barcelona. Looking forward to that. Sarbjeet, I know in a second half, we're going to run into each other. So (indistinct) thank you John. >> Trouble has started. Great talking to you guys today and have fun in Barcelona and keep us informed. >> Thanks for coming. I want to thank Natalie Erlich who's in Rome right now. She's probably well past her bedtime, but she kicked it off and emceeing and hosting with Dave and I for this AW startup showcase. This is batch two episode two day. What do we call this? It's like a release so that the next 15 startups are coming. So we'll figure it out. (laughs) Thanks for watching everyone. Thanks. (bright music)

>> From theCUBE Studios in Palo Alto and Boston, bringing you data-driven insights from theCUBE and ETR. This is Breaking Analysis with Dave Vellante. >> UiPath has had a long, strange trip to IPO. How so you ask? Well, the company was started in 2005. But it's culture, is akin to a frenetic startup. The firm shunned conventions and instead of focusing on a narrow geographic area to prove its product market fit before it started to grow, it aggressively launched international operations prior to reaching unicorn status. Well prior, when it had very little revenue, around a million dollars. Today, more than 60% of UiPath business is outside of the United States. Despite its headquarters being in New York city. There's more, according to recent SEC filings, UiPath total revenue grew 81% last year. But it's free cash flow, is actually positive, modestly. Wait, there's more. The company raised $750 million in a Series F in early February, at a whopping $35 billion valuation. Yet, the implied back of napkin valuation, based on the number of shares outstanding after the offering multiplied by the proposed maximum offering price per share yields evaluation of just under 26 billion. (Dave chuckling) And there's even more to this crazy story. Hello everyone, and welcome to this week's Wikibon CUBE Insights, Powered by ETR. In this Breaking Analysis we'll share our learnings, from sifting through hundreds of pages (paper rustling) of UiPath's red herring. So you didn't have to, we'll share our thoughts on its market, its competitive position and its outlook. Let's start with a question. Mark Roberge, is a venture capitalist. He's a managing director at Stage 2 Capital and he's also a teacher, a professor at the B-School in Harvard. One of his favorite questions that he asks his students and others, is what's the best way to grow a company? And he uses this chart to answer that question. On the vertical axis is customer retention and the horizontal axis is growth to growth rate and you can see he's got modest and awesome and so forth. Now, so I want to let you look at it for a second. What's the best path to growth? Of course you want to be in that green circle. Awesome retention of more than 90% and awesome growth but what's the best way to get there? Should you blitz scale and go for the double double, triple, triple blow it out and grow your go to market team on the horizontal axis or should be more careful and focus on nailing retention and then, and only then go for growth? What do you think? What do you think most VCs would say? What would you say? When you want to maybe run the table, capture the flag before your competitors could get there or would you want to take a more conservative approach? What would Daniel Dines say the CEO of UiPath? Again, I'll let you think about that for a second. Let's talk about UiPath. What did they do? Well, I shared at the top that the company shunned conventions and expanded internationally, very rapidly. Well before it hit escape velocity and they grew like crazy and it got out of control and he had to reign it in, plug some holes, but the growth didn't stop, go. So very clearly based on it's performance and reading through the S1, the company has great retention. It uses a metric called gross retention rate which is at 96 or 97%, very high. Says customers are sticking with it. So maybe that's the right formula go for growth and grow like crazy. Let chaos reign, then reign in the chaos as Andy Grove would say. Go fast horizontally, and you can go vertically. Let me tell you what I think Mark Roberge would say, he told me you can do that. But churn is the silent killer of SaaS companies and perhaps the better path is to nail product market fit. And then your retention metrics, before you go into hyperbolic growth mode. There's all science behind this, which may be antithetical to the way many investors want to roll the dice and go for super growth, like go fast or die. Well, it worked for UiPath you might say, right. Well, no. And this is where the story gets even more interesting and long and strange for UiPath. As we shared earlier, UiPath was founded in 2005 out of Bucharest Romania. The company actually started as a software outsourcing startup. It called the company, DeskOver and it built automation libraries and SDKs for companies like Microsoft, IBM and Google and others. It also built automation scripts and developed importantly computer vision technology which became part of its secret sauce. In December 2015, DeskOver changed its name to UiPath and became a Delaware Corp and moved its headquarters to New York City a couple of years later. So our belief is that UiPath actually took the preferred path of Mark Roberge, five ticks North, then five more East. They slow-cooked for the better part of 10 years trying to figure out what market to serve. And they spent that decade figuring out their product market fit. And then they threw gas in the fire. Pretty crazy. All right, let's take a peak (chuckling) at the takeaways from the UiPath S1 the numbers are impressive. 580 million ARR with 65% growth. That asterisk is there because like you, we thought ARR stood for annual recurring revenue. It really stands for annualized renewal run rate. annualized renewal run rate is a metric that is one of UiPath's internal KPIs and are likely communicate that publicly over time. We'll explain that further in a moment. UiPath has a very solid customer base. Nearly 8,000, I've interviewed many of them. They're extremely happy. They have very high retention. They get great penetration into the fortune 500, around 63% of the fortune 500 has UiPath. Most of UiPath business around 70% comes from existing customers. I always say you're going to get more money out of existing customers than new customers but everybody's trying to go out and get new customers. But UiPath I think is taking a really interesting approach. It's their land and expand and they didn't invent that term but I'll come back to that. It kind of reminds me of the early days of Tableau. Actually I think Tableau is an interesting example. Like UiPath, Tableau started out as pretty much a point tool and it had, but it had very passionate customers. It was solving problems. It was simplifying things. And it would have bid into a company and grow and grow. Now the market fundamentals for UiPath are very good. Automation is super hot right now. And the pandemic has created an automation mandate to date and I'll share some data there as well. UiPath is a leader. I'm going to show you the Gartner Magic Quadrant for RPA. That's kind of a good little snapshot. UiPath pegs it's TAM at 60 billion dollars based on some bottoms up calculations and some data from Bain. Pre-pandemic, we pegged it at over 30 billion and we felt that was conservative. Post-pandemic, we think the TAM is definitely higher because of that automation mandate, it's been accelerated. Now, according to the S1, UiPath is going to raise around 1.2 billion. And as we said, if that's an implied valuation that is lower than the Series F, so we suspect the Series F investors have some kind of ratchet in there. UiPath needed the cash from its Series F investors. So it took in 750 million in February and its balance sheet in the S1 shows about 474 million in cash and equivalent. So as I say, it needed that cash. UiPath has had significant expense reductions that we'll show you in some detail. And it's brought in some fresh talent to provide some adult supervision around 70% of its executive leadership team and outside directors came to the company after 2019 and the company's S1, it disclosed that it's independent accounting firm identified last year what it called the "material weakness in our internal controls over financial report relating to revenue recognition for the fiscal year ending 2018, caused by a lack of oversight and technical competence within the finance department". Now the company outlined the steps it took to remediate the problem, including hiring new talent. However, we said that last year, we felt UiPath wasn't quite ready to go public. So it really had to get its act together. It was not as we said at the time, the well-oiled machine, that we said was Snowflake under Mike Scarpelli's firm operating guidance. The guy's the operational guru, but we suspect the company wants to take advantage of this mock market. It's a good time to go public. It needs the cash to bolster its balance sheet. And the public offering is going to give it cache in a stronger competitive posture relative to its main new competitor, autumn newbie competitor Automation Anywhere and the big whales like Microsoft and others that aspire and are watching what UiPath is doing and saying, hey we want a piece of that action. Now, one other note, UiPath's CEO Daniel Dines owns 100% of the class B shares of the company and has a 35 to one voting power. So he controls the company, subject of course to his fiduciary responsibilities but if UiPath, let's say it gets in trouble financially, he has more latitude to do secondary offerings. And at the same time, it's insulated from activist shareholders taking over his company. So lots of detail in the S1 and we just wanted to give you some of those highlights. Here are the pretty graphs. If whoever wrote this F1 was a genius. It's just beautiful. As we said, ARR, annualized renewal run rate all it does is it annualizes the invoice amount from subscriptions in the maintenance portion of the revenue. In other words, the parts that are recurring revenue, it excludes revenue from support and perpetual license. Like one-time licenses and services is just kind of the UiPath's and maybe that's some sort of legacy there. It's future is that recurring revenue. So it's pretty similar to what we think of as ARR, but it's not exact. Lots of customers with a growing number of six and seven figure accounts and a dollar-based net retention of 145%. This figure represents the rate of net expansion of the UiPath ARR, from existing listing customers over a 12 month period. Translation. This says UiPath's existing customers are spending more with the company, land and expand and we'll share some data from ETR on that. And as you can see, the growth of 86% CAGR over the past nine quarters, very impressive. Let's talk about some of the fundamentals of UiPath's business. Here's some data from the Brookings Institute and the OECD that shows productivity statistics for the US. The smaller charts in the right are for Germany and Japan. And I've shared some similar data before the US showed in the middle there. Showed productivity improvements with the personal productivity boom in the mid to late 90s. And it spilled into the early 2000s. But since then you can see it's dropped off quite significantly. Germany and Japan are also under pressure as are most developed countries. China's labor productivity might show declines but it's level, is at level significantly higher than these countries, April 16th headline of the Wall Street Journal says that China's GDP grew 18% this quarter. So, we've talked about the snapback in post-COVID and the post-isolation economy, but these are kind of one time bounces. But anyway, the point is we're reaching the limits of what humans can do alone to solve some of the world's most pressing challenges. And automation is one key to shifting labor away from these more mundane tasks toward more productive and more important activities that can deliver lasting benefits. This according to UiPath, is its stated purpose to accelerate human achievement, big. And the market is ready to be automated, for the most part. Now the post-isolation economy is increasingly going to focus on automation to drive toward activity as we've discussed extensively, I got to share the RPA Magic Quadrant where nearly everyone's a winner, many people are of course happy. Many companies are happy, just to get into the Magic Quadrant. You can't just, you have to have certain criteria. So that's good. That's what I mean by everybody wins. We've reported extensively on UiPath and Automation Anywhere. Yeah, we think we might shuffle the deck a little bit on this picture. Maybe creating more separation between UiPath and Automation Anywhere and the rest. And from our advantage point, UiPath's IPO is going to either force Automation Anywhere to respond. And I don't know what its numbers are. I don't know if it's ready. I suspect it's not, we'd see that already but I bet you it's trying to get there. Or if they don't, UiPath is going to extend its lead even further, that would be our prediction. Now personally, I would have Pegasystems higher on the vertical. Of course they're not an IPO, RPA specialist, so I kind of get what Gartner is doing there but I think they're executing well. And I'd probably, in a broader context I'd probably maybe drop blue prism down a little bit, even though last year was a pretty good year for the company. And I would definitely have Microsoft looming larger up in the upper left as a challenger more than a visionary in my opinion, but look, Gartner does good work and its analysts are very deep into this stuff, deeper than I am. So I don't want to discount that. It's just how I see it. Let's bring in the ETR data and show some of the backup here. This is a candlestick chart that shows the components of net score, which is spending momentum, however, ETR goes out every quarter. Says you're spending more, you're spending less. They subtract the lesses from the mores and that's net score. It's more complicated than that, but that's that blue line that you see in the top and yes it's trending downward but it's still highly elevated. We'll talk about that. The market share is in the yellow line at the bottom there. That green represents the percentage of customers that are spending more and the reds are spending less or replacing. That gray is flat. And again, even though UiPath's net score is declining, it's that 61%, that's a very elevated score. Anything over 40% in our view is impressive. So it's, UiPath's been holding in the 60s and 70s percents over the past several years. That's very good. Now that yellow line market share, yes it dips a bit, but again it's nuanced. And this is because Microsoft is so pervasive in the data stat. It's got so many mentions that it tends to somewhat overwhelm and skew these curves. So let's break down net score a little bit. Here's another way to look at this data. This is a wheel chart we show this often it shows the components of net score and what's happening here is that bright red is defection. So look at it, it's very small that wouldn't be churn. It's tiny. Remember that it's churn is the killer for software companies. And so that forest green is existing customers spending more at 49%, that's big. That lime green is new customers. So again, it's from the S1, 70% of UiPath's revenue comes from existing customers. And this really kind of underscores that. Now here's more evidence in the ETR data in terms of land and expand. This is a snapshot from the January survey and it lines up UiPath next to its competitors. And it cuts the data just on those companies that are increasing spending. It's so that forest green that we saw earlier. So what we saw in Q1 was the pace of new customer acquisition for UiPath was decelerating from previous highs. But UiPath, it shows here is outpacing its competition in terms of increasing spend from existing customers. So we think that's really important. UiPath gets very high scores in terms of customer satisfaction. There's, I've talked to many in theCUBE. There's places on the web where we have customer ratings. And so you want to check that out, but it'll confirm that the churn is low, satisfaction is high. Yeah, they get dinged sometimes on pricing. They get dinged sometimes, lately on service cause they're growing so fast. So, maybe they've taken the eye off the ball in a couple of counts, but generally speaking clients are leaning in, they're investing heavily. They're creating centers of excellence around RPA and automation, and UiPath is very focused on that. Again, land and expand. Now here's further evidence that UiPath has a strong account presence, even in accounts where its competitors are presence. In the 149 shared accounts from the Q1 survey where UiPath, Automation Anywhere and Microsoft have a presence, UiPath's net score or spending velocity is not only highly elevated, it's relative momentum, is accelerating compared to last year. So there's some really good news in the numbers but some other things stood out in the S1 that are concerning or at least worth paying attention to. So we want to talk about that. Here is the income statement and look at the growth. The company was doing like 1 million dollars in 2015 like I said before. And when it started to expand internationally it surpassed 600 million last year. It's insane growth. And look at the gross profit. Gross margin is almost 90% because revenue grew so rapidly. And last year, its cost went down in some areas like its services, less travel was part of that. Now jump down to the net loss line. And normally you would expect a company growing at this rate to show a loss. The street wants growth and UiPath is losing money, but it's net loss went from 519 million, half a billion down to only 92 million. And that's because the operating expenses went way down. Now, again, typically a company growing at this rate would show corresponding increases in sales and marketing expense, R&D and even G&A but all three declined in the past 12 months. Now reading the notes, there was definitely some meaningful savings from no travel and canceled events. UiPath has great events around the world. In fact theCUBE, Knock Wood is going to be at its event in October, in Las Vegas at the Bellagio . So we're stoked for that. But, to drop expenses that precipitously with such high growth, is kind of strange. Go look at Snowflake's income statement. They're in hyper-growth as well. We like to compare it to Snowflake is a very well-run company and it's in hyper-growth mode, but it's sales and marketing and R&D and G&A expense lines. They're all growing along with that revenue. Now, perhaps they're growing at a slower rate. Perhaps the percent of revenue is declining as it should as they achieve operating leverage but they're not shrinking in absolute dollar terms as shown in the UiPath S1. So either UiPath has applied some magic automation mojo to it's business (chuckling). Like magic beans or magic grits with my cousin Vinny. Maybe it has found the Holy grail of operating leverage. It's a company that's all about automation or the company was running way too hot on the expense side and had a cut and clean up its income statement for the IPO and conserve some cash. Our guess is the latter but maybe there's a combination there. We'll give him the benefit of the doubt. And just to add a bit more to this long, strange trip. When have you seen an explosive growth company just about to go public, show positive cashflow? Maybe it's happened, but it's rare in the tech and software business these days. Again, go look at companies like Snowflake. They're not showing positive cashflow, not yet anyway. They're growing and trying to run the table. So you have to ask why is UiPath operating this way? And we think it's because they were so hot and burning cash that they had to reel things in a little bit and get ready to IPO. It's going to be really interesting to see how this stock reacts when it does IPO. So here's some things that we want you to pay attention to. We have to ask. Is this IPO, is it window dressing? Or did UiPath again uncover some new productivity and operating leverage model. I doubt there's anything radically new here. This company doesn't want to miss the window. So I think it said, okay, let's do this. Let's get ready for IPO. We got to cut expenses. It had a lot of good advisors. It surrounded itself with a new board. Extended that board, new management, and really want to take advantage of this because it needs the cash. In addition, it really does want to maintain its lead. It's got Automation Anywhere competing with it. It's got Microsoft looming large. And so it wants to continue to lead. It's made some really interesting acquisitions. It's got very strong vision as you saw in the Gartner Magic Quadrant and obviously it's executing well but it's really had to tighten things up. So we think it's used the IPO as a fortune forcing function to really get its house in order. Now, will the automation mandate sustain? We think it will. The forced match to digital worked, it was effective. It wasn't pleasant, but even in a downturn we think it will confer advantage to automation players and particularly companies like UiPath that have simplified automation in a big way and have done a great job of putting in training, great freemium model and has a culture that is really committed to the future of humankind. It sounds ambitious and crazy but talk to these people, you'll see it's true. Pricing, UiPath had to dramatically expand or did dramatically expand its portfolio and had to reprice everything. And I'm not so worried about that. I think it'll figure that pricing out for that portfolio expansion. My bigger concern is for SaaS companies in general. I don't like SaaS pricing that has been popularized by Workday and ServiceNow, and Salesforce and DocuSign and all these companies that essentially lock you in for a year or two and basically charge you upfront. It's really is a one-way street. You can't dial down. You can only dial up. It's not true Cloud pricing. You look at companies like Stripe and Datadog and Snowflake. It is true Cloud pricing. It's consumption pricing. I think the traditional SaaS pricing model is flawed. It's very unfairly weighted toward the vendors and I think it's going to change. Now, the reason we put cloud on the chart is because we think Cloud pricing is the right way to price. Let people dial up and dial down, let them cancel anytime and compete on the basis of your product excellence. And yeah, give them a price concession if they do lock in. But the starting point we think should be that flexibility, pay by the drink. Cancel anytime. I mentioned some companies that are doing that as well. If you look at the modern SaaS startups and the forward-thinking VCs they're really pushing their startups to this model. So we think over time that the term lock-in model is going to give way to true consumption-based pricing and at the clients option, allow them to lock-in for a better price, way better model. And UiPath's Cloud revenue today is minimal but over time, we think it's going to continue to grow that cloud. And we think it will force a rethink in pricing and in revenue recognition. So watch for that. How is the street going to react to Daniel Dines having basically full control of the company? Generally, we feel that that solid execution if UiPath can execute is going to outweigh those concerns. In fact, I'm very confident that it will. We'll see, I kind of like what the CEO says has enough mojo to say (chuckling) you know what, I'm not going to let what happened to for instance, EMC happen to me. You saw Michael Dell do that. You saw just this week they're spinning out VMware, he's maintaining his control. VMware Dell shareholders get get 40.44 shares for every Dell share they're holding. And who's the biggest shareholder? Michael Dell. So he's, you got two companies, one chairman. He's controlling the table. Michael Dell beat the great Icahn. Who beats Carl Icahn? Well, Michael Dell beats Carl Icahn. So Daniel Dines has looked at that and says, you know what? I'm not just going to give up my company. And the reason I like that with an if, is that we think will allow the company to focus more on the long-term. The if is, it's got to execute otherwise it's so much pressure and look, the bottom line is that UiPath has really favorable market momentum and fundamentals. But it is signing up for the 90 day short clock. The fact that the CEO has control again means they can look more long term and invest accordingly. Oftentimes that's easier said than done. It does come down to execution. So it is going to be fun to watch (chuckling). That's it for now, thanks to the community for your comments and insights and really always appreciate your feedback. Remember, I publish each week on Wikibon.com and siliconangle.com and these episodes are all available as podcasts. All you got to do is search for the Breaking Analysis podcast. You can always connect with me on Twitter @dvellante or email me at david.vellante@siliconangle.com or comment on my LinkedIn posts. And we'll see you in clubhouse. Follow me and get notified when we start a room, which we've been doing with John Furrier and Sarbjeet Johal and others. And we love to riff on these topics and don't forget, please check out etr.plus for all the survey action. This is Dave Vellante, for theCUBE Insights Powered by ETR. Be well everybody. And we'll see you next time. (gentle upbeat music)